Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

PIER AND HARBOUR PROVISIONAL ORDER (FISHGUARD AND GOODWICK HARBOUR) BILL

Read a Second time and committed.

Oral Answers to Questions — ENVIRONMENT

Rates

Mr. Michael Morris: asked the Secretary of State for the Environment if he has any proposals to assist domestic ratepayers whose rates increase by more than 20 per cent. in 1974–75.

The Secretary of State for the Environment (Mr. Anthony Crosland): I take it that the hon. Member is referring to 1975–76. He was kind enough to ring my private office.
My right hon. Friend the Chancellor of the Exchequer announced in July our measures to help householders faced with rate increases of more than 20 per cent. in 1974–75. I have no plans to repeat those measures for 1975–76.

Mr. Morris: I am grateful to the Secretary of State for that answer. I apologise for not picking up the typographical error earlier. Since, last year, he said that he was providing a lifeline to the unfortunate ratepayer, may I ask, whether in view of his forecast of a 25 per cent. average increase this year, he will come back to the House if it transpires that the average rate increase throughout the country is in excess of that figure?

Mr. Crosland: There is a major difference between this year and last

year. Last year's original Conservative Government's rate support grant settlement provided local authorities with £3,430 million which paid for 60½per cent. of the reckonable expenditure. This year the Labour Government's rate support grant settlement has provided £5,430 million—£2,000 million extra—which will cover 66½per cent. of local government expenditure.

Mr. Channon: Will the right hon. Gentleman answer the question put to him by my hon. Friend? Does he stick to his forecast that rates will on average go up by only 25 per cent., or has he any modification? If the rates go up by more than that figure, will he come forward with extra help?

Mr. Crosland: I have no modification to make of that forecast, which was based on an important condition that I have always underlined. The figure is good if, and only if, local authorities keep within the totals of expenditure agreed between them and Government. The point about another relief operation next year is that if this kind of relief were to become an annual event local authorities would be strongly encouraged to set their rates as high as they liked in the certain knowledge that the Government would bail out their domestic ratepayers.

Mr. Hurd: asked the Secretary of State for the Environment what proposals he has for giving relief in 1975–76 to domestic and commercial ratepayers in areas of special difficulty.

Mr. Arthur Jones: asked the Secretary of State for the Environment if he will make proposals designed to ensure that no undue rate burden falls upon small shopkeepers.

The Under-Secretary of State for the Environment (Mr. Gordon Oakes): The House has already approved my right hon. Friend's proposals under which our ratepayers, both domestic and non-domestic, in all areas, will benefit from the unprecedentedly generous rate of grant to be given for 1975–76 and the special increase which he has made in the grant for 1974–75.

Mr. Hurd: Will the hon. Gentleman accept our congratulations that his party has now, through the evidence it has given or will be giving to the Layfield


Committee, accepted the proposal which started on the Conservative side of the House that teachers' salaries should be paid by the Government? Would it not have made a great deal of difference and saved a great deal of time if, instead of criticising our proposal during the election, the Labour Party had accepted it?

Mr. Oakes: It was not specifically that proposal to which we objected. It was the proposal put forward by the right hon. Member for Finchley (Mrs. Thatcher) to abolish the domestic rating system without any idea of what was going in its place.

Mr. Edward Gardner: Is the hon. Gentleman aware that in the part of Lancashire which includes my constituency serious fears have recently been expressed by responsible people like local councillors that the increase in the rates for 1975–76 is likely to be in the region of 80 per cent.? Is the hon. Gentleman further aware that a large part of my constituency is made up of farming land with a paucity of industrial development? The result is that any rates increase will fall largely upon domestic ratepayers and local shopkeepers who can ill afford such increases. Can the hon. Gentleman say—or, better still, do—something—[HON. MEMBERS: "Too long."]—to assuage the anxieties of these people and give them some assurance of future solvency?

Mr. Oakes: All areas, including the constituency of the hon. and learned Gentleman, benefit considerably from the increase the Government have given in this year's rate support grant. If the hon. and learned Gentleman is arguing in favour of agricultural derating because his is an agricultural area and there is a heavy burden on the domestic ratepayer, perhaps he will submit that view to the Layfield Committee.

Mr. Snape: Will my hon. Friend accept my congratulations and those of the ratepayers of Sandwell metropolitan borough for the generosity of the 1975 rate support grant? Can he also find a few words of sympathy for the ratepayers of the Midlands generally following the increase of 40 per cent. in the water rate for 1975–76 which, together with an increase of 60 per cent. in the current year—[HON. MEMBERS: "Too long."]—

means a total increase of 100 per cent. since the creation of the—

Mr. Speaker: Order. This is the trouble. One speech leads to another.

Mr. Snape: This makes a total increase of 100 per cent. since the creation of the Severn-Trent Regional Water Authority—another body created following the reorganisation of local government by the Conservative Party.

Mr. Oakes: The West Midlands area did very badly last year, even when in his "rough justice" speech my right hon. Friend changed the amount of grant to the West Midlands—Sandwell particularly. This year I am delighted to say that the area has done much better. There are problems with regard to water, particularly water from Wales, which my hon. Friend's constituency receives, and this matter is currently being looked at by my right hon. Friend.

Housing Land

Mr. Fox: asked the Secretary of State for the Environment if he will invite local authorities to designate land specifically for system-built low-cost housing.

The Minister for Housing and Construction (Mr. Reginald Freeson): I will consider this suggestion in the light of the review of low-cost housing.

Mr. Fox: Is the Minister aware that many local authorities are sitting on colossal land banks and are behaving like misers with this valuable asset? By securing the release of this land the Government would be seen to be tackling the housing crisis and helping the housing problem this year.

Mr. Freeson: I am probing several instances of local authority-held land which could be brought into housing programmes more quickly. I should welcome any information from the hon. Gentleman in support of his general statement, and should be glad to probe the possibility of bringing the land more quickly into housing use.

Mr. Stephen Ross: Will the Minister also look at the question of holiday camps changing over to self-catering establishments? Purpose built chalets of


500 ft. super with two or three bedrooms could be used for permanent occupation if the present planning restrictions were removed. Some chalets are allowed to be occupied for 364 days but others require a break of up to 11 weeks.

Mr. Freeson: That situation and its implications fall to be dealt with by the working party which we have set up under the chairmanship of my hon. Friend the Under-Secretary of State to look into a variety of questions concerned with mobile residential sites. Any information and ideas on these matters will be welcomed by the working party.

Transport Expenditure

Mr. Hicks: asked the Secretary of State for the Environment what principles he applies in deciding the level and distribution of local transport expenditure for transport supplementary grant in each county for 1975–76.

The Minister for Transport (Mr. Frederick Mulley): The matters I took into account are explained in the decision letter sent to all counties. I have sent a copy to the hon. Member and arranged for copies to be placed in the Library.

Mr. Hicks: In view of the sparsity of public transport in rural areas such as Cornwall, does not the Minister agree that there is a need for the Government to introduce measures designed to widen the whole basis of the transport supplementary grant support so that a more flexible local transport system can be evolved?

Mr. Mulley: It is open to all county councils to make grants to maintain rural transport. Unfortunately many of them have not done so. Those that have done so receive an allocation for that purpose under the transport supplementary grant arrangements. I agree that the structure of the TSG is far from satisfactory, but I am bound by the statutory provision enacted by the Conservatives when they were in government.

Mr. Speed: Will the Minister confirm that TSGs should not be used to subsidise fares?

Mr. Mulley: The hon. Gentleman should know, perhaps even better than I because he was there when this was

worked out, that the moneys are paid to the local authorities, which have great discretion in spending that money. It is entirely a matter for the local authority how the TSG is spent.

Roads (Construction and Repair)

Sir A. Meyer: asked the Secretary of State for the Environment if he will seek powers to assume responsibility for all road construction and repair including secondary roads which are at present the responsibility of county councils.

Mr. Mulley: No, Sir.

Sir A. Meyer: Is the right hon. Gentleman satisfied that the stringent priorities which the economic situation compel for the national road programme are applied also to the maintenance and improvement of secondary roads? Is he aware that there are many instances where men, materials and money for road building are being applied to relatively minor roads when they might much more usefully be applied to long overdue major road programmes, such as the A55 running through my constituency?

Mr. Mulley: Central responsibility for the maintenance of all roads would not necessarily lead to more money being made available. If, as the hon. Gentleman argues, the central Government were responsible for the maintenance of the 210,000 miles of roads in the country, that would be contrary to the generally accepted proposition that local authorities should have more powers of decision in transport matters, which differ so markedly from one area to another.

Mr. MacFarquhar: Is my right hon. Friend aware that where he is responsible for road construction he also has a duty to maintain the existing network of footpaths? Is he further aware that in my constituency there is grave disquiet about the effect of the Ripley bypass project on local footpaths? Will he undertake to investigate speedily the cogent arguments put forward on this subject by my constituent, Mr. Turner?

Mr. Mulley: I confess that I do not have with me a clear indication of my hon. Friend's constituent's views, but I will refresh my memory on the matter and write to my hon. Friend.

Freight (Carriage)

Mr. Budgen: asked the Secretary of State for the Environment how he intends to implement his policy of transferring freight from road to rail.

Mr. Mulley: I have initiated discussions between British Rail and about 100 of the country's largest firms to encourage greater use of rail. There will also be grants under Section 8 of the Railways Act 1974 towards the provision of private sidings.

Mr. Budgen: Do the Government intend to implement the quantity licensing provisions of the Transport Act 1968? If they do not intend to use those provisions, will they amend the Act by removing them?

Mr. Mulley: Those provisions cannot be brought into effect without regulations being made. The hon. Gentleman will realise that several years have elapsed since the 1968 Act was passed and that no steps were taken to that end when there was rather less parliamentary business than there is this Session.

Mr. Prescott: That answer is not satisfactory. In my area certain rail services were closed down at a time when my right hon. Friend was encouraging companies to transfer traffic from road to rail. The only way to get an efficient integrated transport policy is to implement the quantity licensing provisions in the 1968 Act.

Mr. Mulley: I am aware of the difficulties to which my hon. Friend refers, and which have a bearing in my constituency as well as in his. I have had discussions with the National Freight Corporation, Freightliners and hon. Members on this subject. That situation would not be remedied by the implementation of quantity licensing.

Mr. Geoffrey Finsberg: Will the right hon. Gentleman also consider the possibility of transferring a certain amount of freight to the canals, where construction costs are very much cheaper than they are for road or rail?

Mr. Mulley: I should certainly welcome every opportunity to put freight on to waterways where that can be done with reasonable economy.

Mr. Cant: Although we have been great supporters of the internal combustion engine, will my right hon. Friend ask his right hon. Friend the Secretary of State for Industry to review the enormous sums which are currently being invested on capital account in the railways and consider whether it is necessary to increase the number of trains on inter-city services, many of which are running half empty, and to invest a further £100 million in the advanced passenger train so that we can get from A to B 30 minutes faster?

Mr. Mulley: It is right that the railways should be encouraged to continue their work on the advanced passenger train, and I have authorised some prototypes. In my discussions with the Railways Board, however, I stressed that we are also concerned with commuter, freight and other rail aspects. I will convey my hon. Friend's view to the Chairman of the Railways Board. They are his responsibility and not that of my right hon. Friend the Secretary of State for Industry.

Development Land

Mr. Sainsbury: asked the Secretary of State for the Environment whether he will now abandon the proposals for taking development land into community ownership in view of the fact that local authorities have submitted to him the opinion that the proposals will delay house building.

Mr. Crosland: No, Sir. No local authorities have submitted to me the opinion that the implementation of my proposals will delay house building.

Mr. Sainsbury: Has the right hon. Gentleman seen the reported opinions of the Greater London Council, among other local authorities, and the views of a wide variety of respected commentators who have expressed this worry? Is he aware that the White Paper is already delaying the forward housing programme because of its effect on land acquisition and on planning by builders which is necessary if they are to have a continuous programme?

Mr. Crosland: I have seen the reported views of the Greater London Council on this matter and perhaps I could quote the council's actual views as stated on 12th December. The council said that it
welcomes the objective of providing the opportunity through land ownership for more


positive planning in housing as in other forms of development".
On the more general part of the hon. Gentleman's supplementary question, he greatly underestimates the extreme care taken in these proposals not to introduce measures or arrangements which would affect the house building programme. That remains an absolutely firm objective of the Government.

Mr. Frank Allaun: Will my right hon. Friend confirm that last weekend the representatives of 600 local authorities took exactly the opposite view from that expressed by the hon. Member for Hove (Mr. Sainsbury) and that their anxiety was in the opposite direction—namely, that public acquisition powers should be obtained by them more quickly and not less quickly?

Mr. Crosland: My hon. Friend is quite right in his account of the conference which we both had the pleasure of attending. He is also right to say that from many quarters the criticism is the opposite one—namely, that in the transitional period we have made concessions to private builders to protect the house building programme which go too far. Personally I do not think they have gone too far, but nevertheless it is right to bear in mind that there is also that opposite criticism.

Mr. Rossi: Will the Secretary of State say what additional recruitment will have to be made by local authorities in town planning, valuation and legal departments to implement these proposals? What estimates has he made of the additional rate burden which will fall on the nation because of such recruitment and the additional office accommodation that will be required?

Mr. Crosland: There will, of course, have to be additional recruitment, as we have made clear, though I cannot put a quantitative figure on it. This necessity is one of the reasons for our having made transitional provisions in the White Paper proposals.
As for the second part of the hon. Gentleman's supplementary question, I wish to underline what I have said on many occasions—namely that, taking a reasonably long-term view, these proposals will not cost the community something

but will be of enormous financial benefit to the community.

Ports (Nationalisation)

Mr. Adley: asked the Secretary of State for the Environment if he can now say when he intends to introduce legislation to nationalise the ports; and if he will make a statement.

Mr. Mulley: I am preparing detailed proposals for further consultation.

Mr. Adley: Which of the ports now run by public bodies does the Minister hold up as examples of efficiency, good labour relations and quick turn-round? Is he aiming to try to make Felixstowe as efficient as Liverpool? Will he ensure that before he does anything he will undertake full consultations with those who are now working in ports operated by free enterprise compaines?

Mr. Mulley: I am having consultations on a general rather than a selective basis. Those who represent workers in Felixstowe will be included in the consultations, along with those who represent workers elsewhere. If the hon. Gentleman took the trouble to look at Southampton as an example of a publicly owned port—and I can think of other examples—he might take a different view. But perhaps this is not a suitable occasion on which to conduct a Second Reading debate on a Bill which necessarily is not yet ready.

Mr. Leadbitter: Will my right hon. Friend bear in mind that the British Transport Docks Board has a long history of remarkable success? As a result of recommendations made over many years to ensure accountability to the public in respect of nationalisation, should we not project this example? Does my right hon. Friend agree that the process should be undertaken in such a way that the maximum amount of discussion will be brought to an end at a reasonably early stage to enable nationalisation of the ports to be brought about in the national interest?

Mr. Mulley: I endorse my hon. Friend's view about the operation of the British Transport Docks Board and the other publicly owned ports. I have always made it clear that, if I am to have


the wide consultations that I deem necessary, it will not be practicable to introduce a measure this Session. Furthermore, the House will appreciate that in any event the Government have a rather full programme in the present Session.

Mr. Body: Will the Minister undertake to leave well alone one port in particular—that is, the municipally owned port of Boston in my constitutency, which is and has for years been free from industrial trouble and is growing in importance to port users?

Mr. Mulley: In my original consultation letter in August I made clear what was intended. The final phase will arise after consultations are carried out. Where a port is municipally owned, we do not intend to bring about any change of ownership.

Mr. Delargy: Will my right hon. Friend bear two matters in mind? First, does he appreciate that it will require little effort to introduce legislation of this sort, because in a previous Parliament similar legislation passed all its stages in this House and was defeated in the Lords, and then came the General Election and we had to start the process all over again? Secondly, will he bear in mind that all workers in the docks are in favour of complete nationalisation of ports?

Mr. Mulley: I am afraid that the matter is not as simple as my hon. Friend suggests, because in 1970 the proposal was to take into public ownership only those ports handling a tonnage of more than 5 million tons per annum. Because of developments since that date, we believe that it is now essential to bring into a form of public ownership all commercial ports and cargo-handling activities. The ports legislation in 1970 was complicated enough, and our proposed legislation will be much more complicated.

Motorway Programme

Mr. Cryer: asked the Secretary of State for the Environment if he will announce the motorway projects that are now to be abandoned; and if he will introduce measures to end blight in those areas affected.

Mr. Mulley: The programme has already been reduced substantially and I have no plans to cut it further at present.

Priority will continue to be given to schemes which will take heavy traffic out of towns and villages. I am very conscious of the problems of blight and everything possible is being done to minimise them.

Mr. Cryer: Will my right hon. Friend accept my congratulations on abandoning the Aire Valley motorway scheme? Will he also accept that many of my constituents in the Stockbridge area of Keighley hope that his new proposals will end blight in the area? Now that the scheme has been abandoned, will the Department put back on the market houses and property which it has bought so that areas which have been blighted can gain confidence?

Mr. Mulley: I am grateful for my hon. Friend's kind words. In this office one gets all too few commendations. It is right in the present situation that the road scheme in my hon. Friend's constituency should be an all-purpose scheme and not a motorway. However, such a decision will take several months since we must work out a detailed line, although we are moving as quickly as possible. When there is no need to protect a line because of a change of policy, we would not wish to maintain properties which we have had to acquire. I shall be glad to discuss with my colleagues whether such properties should be sold or retained as part of the local authority housing stock.

Mr. Rossi: Is the right hon. Gentleman aware that a year has elapsed since a public inquiry took place on the Archway Road widening scheme in my constituency and that despite numerous requests for a determination by the Department of the Environment none has been forthcoming? Is he also aware that major problems of personal hardship will now arise as a result of blight because of delays and the running down of the district and that there is mounting public anger? Will he give an assurance that we shall be given a decision one way or the other by the end of the month?

Mr. Mulley: A great deal of blight occurs as a result of public participation exercises and is an inevitable consequence, although of course it is desirable that there should be the maximum public participation. However, if the public are given the choice of four or five routes


and additionally are invited to suggest other alternatives, blight is bound to be caused while a scheme is being considered. I will certainly look at this particular scheme. If I made a decision within a year, it would be much faster than any such decisions by the previous Government, as I had occasion to point out from time to time.

Mr. Jay: As the Government are rightly looking for economies in public expenditure, and as motorways represent one of the few forms of expenditure to which there is a great deal of public opposition, would it not be wise for the Government in present circumstances at least to postpone all new motorway schemes until the economic situation has improved?

Mr. Mulley: I think my right hon. Friend is unaware that the trunk road and motorway programme is now running at about 40 per cent. below what was forecast two years ago and that similarly local authority expenditure on roads is about 40 per cent. below what was forecast. It would be wrong to give the impression that we should not continue with the road building programme, because in many instances the economic and environmental benefits from those roads are considerable. Indeed, to implement all the requests that I receive in a month from my hon. Friends would take my allocation for a year.

Railways (Reopened Lines)

Mr. Gwilym Roberts: asked the Secretary of State for the Environment how many railway lines have been reopened in each of the past five years; and how many proposals he is currently considering.

Mr. Mulley: Two in 1970, one in 1972, three in 1973 and one in 1974 were authorised for reopening as light railways. In addition the Railways Board reopened their Peterborough-Spalding line in 1971. There are two other current proposals.

Mr. Roberts: Does my right hon. Friend agree that that is a sad record in view of the considerable need to improve public transport? Does he accept that if urgently required railway lines, such as the Walsall-Cannock-Rugeley line, are to stand any chance of being

reopened, we cannot depend on local authorities or British Rail but that there must be additional Government money? Does he agree with many hon. Members on this side of the House, who do not accept the cry to reduce public expenditure, that there is an urgent need for a considerable injection of Government capital into British Rail?

Mr. Mulley: I note my hon. Friend's views about there being no need to reduce public expenditure. Unfortunately I have to work out my programme from instructions which come from my right hon. Friends who think that there is a need to reduce public expenditure. I have every sympathy with my hon. Friend's interest. This kind of proposal must come from the local authorities and/or the Railways Board. Under the Railways Act, which we enacted last Session, I shall be required to find between £300 million and £400 million for revenue support for the railways under the new system.

Rear Admiral Morgan-Giles: Is the Mid-Hants railway, the so-called "Watercress line", one of the two proposals currently under consideration?

Mr. Mulley: I am not sure whether that question should be addressed to my right hon. Friend the Minister for Agriculture, Fisheries and Food. The two proposals which are currently under consideration are the Taunton-Minehead and Sheringham-Weybourne lines.

Mr. Grocott: In view of the need, even at this late date, to try to repair some of the vandalism of the Beeching era, may I ask whether my right hon. Friend agrees that it is a mistake for British Rail in any area to sell off assets, to demolish station buildings or to remove the track bed or embankments of railways closed in the past which may very likely need to be reopened in the near future?

Mr. Mulley: It is difficult to make a blanket statement. My hon. Friend says that it is a question of whether they are likely to be reopened, and that is the kernel of the argument. It must remain largely a matter for British Rail. I accept the great importance of British Rail, but I am rightly under strong pressure to do even more than we have been able to do to support road passenger public transport as well.

Mr. Stephen Ross: In view of the further closures which are being announced by British Rail—for instance the Bridport-Maiden Newton line, which is now to be closed in May, and the Alton to Holtwhistle line at the same time—will the Minister take action to ensure that the lines do not close, particularly in view of the problems facing people in rural areas anyway?

Mr. Mulley: In the summer I cancelled the proposed closure of a considerable number of lines, but on economic considerations I did not feel justified in continuing the subsidy on the Holtwhistle line. Perhaps the hon. Gentleman will let me know about the other line. I am not at the moment aware of the current position on that one, because closure proposals emanate from British Rail.

Public Transport Services

Mr. Dodsworth: asked the Secretary of State for the Environment what effect he expects the increases in petrol prices to have on demand for public transport services.

Mr. Mulley: Some increased demand is likely.

Mr. Dodsworth: Does the Minister accept that the brevity and ineptness of his reply will cause widespread dismay to users of public transport throughout the country? Rural services are already in disarray and inadequate for their purpose. We have a situation where we understand—

Mr. Speaker: Order. I must insist that questions be asked, not statements made.

Mr. Dodsworth: May I ask the Minister to review the system of public passenger transport licensing to satisfy himself that we are making the fullest possible use of all the resources available?

Mr. Mulley: I am surprised that the hon. Gentleman should think that the words I uttered a few minutes ago should already have caused widespread concern thoroughout the country. That depicts that the state of our communication is rather better than I had believed. I accept that the inadequate provision of public transport is a serious matter and I shall be pleased to do anything I can to remedy the situation. However, I stress that even

when more power is given to local authorities to determine these matters and to make grants to the National Bus Company or to subsidise services and so on—we did not contest the principle—all too frequently they are unwilling to do this. Therefore, it is not wholly a central Government matter. Apart from finding money, which I find a problem these days, if I can help the hon. Gentleman's constituency perhaps he will let me know.

Mr. Tomlinson: Does my right hon. Friend agree that the only logic in having a 25 per cent. rate of VAT on petrol is to reduce the consumption of petrol, and that he ought to be going much further in his cuts in the motorways programme so that existing scarce resources can be bolstered by the additional money for public transport services?

Mr. Mulley: I hope that the package of fuel measures announced by my right hon. Friend will have the effect of substantially curtaining the demand for petrol. Indeed, my right hon. Friend and I were criticised because our measures did not go far enough. We are reforecasting the traffic requirements for the road programme in the light of the expected decline in mileage, particularly of private cars.

Mr. Ridsdale: Does the Minister accept that the threatened increase of 50 per cent. in bus fares, due to wage demands on the public bus companies, will curtail the demand for public transport?

Mr. Mulley: The hon. Gentleman has the advantage of me. I do not know about a 50 per cent. increase in bus fares. Certainly this would not be general. I accept that increases in fares have a bearing on demand. The most crucial thing is for public transport, wherever possible, to improve the reliability of the service. That has a greater bearing on attracting people from private cars to public transport than the level of fares.

Gipsy Sites

Mr. Newens: asked the Secretary of State for the Environment what plans he has in connection with the number of authorised sites for gipsies and other travelling people in England and Wales.

Mr. Oakes: As already announced, my Department has appointed an advisory


officer whose main task will be to assist local authorities to tackle this problem. There will be discussions as soon as possible with all the local authorities in the main problem areas.

Mr. Newens: Does not my hon. Friend agree that it is appalling that there are still not enough authorised sites to provide for the existing gipsy and travelling population? In these circumstances, does he not accept that there is an urgent need for legislation to compel local authorities which are not yet providing sites to act, so that the gipsies do not continue to be harassed and the authorities which are playing their part are not forced to do the work also of those authorities which are not?

Mr. Oakes: I agree that this is a problem. There are now 117 official sites in England and Wales accommodating 1,700 families, but well over 3,000 families have still to be accommodated. I do not know whether legislation is the answer. There is legislation already, and I would remind local authorities that the Act places a statutory duty upon them.

Mr. Jasper More: Is the hon. Gentleman aware that in the long term gipsy problems will not be solved except in an atmosphere of good will on the part of the gipsies and of the communities in whose areas gipsy problems exist, and that judging from my constituency this will not be achieved by the bulldozing methods available under the statutory powers of the Caravan Sites Act? Is the hon. Gentleman having advice from his newly-appointed advisory officer on these problems?

Mr. Oakes: Yes, that was one of the main reasons for his appointment. We hope that he will bring to the attention of authorities the best practices of other authorities and that he will have the support and respect of the gipsy population and of local authorities.

Mr. Sydney Irving: In view of the serious neglect by many county councils of their duties under Section 6 of the Act, does my hon. Friend consider that he should now himself, without further legislation, use his power of direction under Section 9?

Mr. Oakes: We consider the use of that power from time to time but we

much prefer local authorities to tackle this problem on their own, rather than risk what the hon. Member for Ludlow (Mr. More) mentioned, with the Department intervening and creating even greater disharmony with the local authorities concerned.

Mr. Wells: Is the Minister aware that one of the biggest sources of anxiety is that some authorities play their Fart and provide the places, but neighbouring authorities do not and thereby put greater strain on the good authorities? Is his adviser a gipsy, as it were, or a civil servant, as it were?

Mr. Oakes: The adviser is certainly a civil servant; I have no idea of his racial origin. What the hon. Gentleman mentions is one of the things that the adviser will be doing, pressing on local authorities which are not providing sites and which are in problem areas just how unfair they are being to neighbouring authorities.

M16 Motorway

Mr. Biggs-Davison: asked the Secretary of State for the Environment when he expects the public inquiry into the routing of the M16 to be completed; and what is the programme of its construction.

Mr. Mulley: The public inquiry into objections to the proposed route of the M16 between the A10 and the A12 is unlikely to be completed for several months. Subject to the satisfactory completion of the statutory processes and the availability of funds, work on this length of the motorway could begin in mid-1977, with completion two years later.

Mr. Biggs-Davison: Has the Minister received any complaints concerning the conduct of the public inquiry? Should any such complaints be addressed to him or to the inspector?

Mr. Mulley: I think that there have been complaints, but the conduct of the inquiry is in the hands of the inspector. I believe that one or two objectors were talking of applying to the High Court, but so far as I know they have not followed that up.

Mr. Newens: Is my right hon. Friend convinced that the public inquiry is legal


in every respect? Certain objections have been made in this locality, where there are strong objections to the motorway itself, that the inquiry was not being conducted in a fully legal manner.

Mr. Mulley: I am advised that the statutory requirements were met in all respects, but if the relevant schemes for this length of the motorway are eventually made there will then be an opportunity for anyone who wishes to do so to challenge their validity in the courts on the grounds that they are ultra vires or that the law has not been complied with.

National Housing Finance Agency

Mr. McCrindle: asked the Secretary of State for the Environment if it is still the Government's policy to create a National Housing Finance Agency; what its functions will be in relation to first-time house buyers; and what its relationship to the building societies movement will be.

Mr. Crosland: I would refer the hon. Member to the reply given to the hon. Member for Melton (Mr. Latham) on 2nd December 1974.—[Vol. 882, c. 388.]

Mr. McCrindle: In view of the continuing recession in house building, as evidenced by the latest figures, would it not be a particularly good idea to get the market moving at what I might call the bottom end? Would not the provision of preferential mortgages for first-time buyers be a real step in that direction? Finally, how long after the General Election promise of the Labour Party to assist these people will we have to wait for it to be realised?

Mr. Crosland: This Government have already given enormous assistance through the £500 million loan to the building societies, as a result of which mortgage lending is now running at a monthly rate about double what it was before the loan. However, I agree with the hon. Gentleman that it is crucial to get the market moving at the lower end. That is why, on top of the £500 million loan and despite the much healthier flow of mortgage finance now as compared with a few months ago, I am discussing with the building societies and the builders what additional steps we might take to achieve the end in view.

Mr. Frank Allaun: Does my right hon. Friend recognise the truth of the old Lancashire saying "There's nowt so safe as houses"? Will he therefore propose to the building societies that they grant 100 per cent. loans, as many local authorities already do? This would do more than anything else to get the private house market moving.

Mr. Crosland: I take my hon. Friend's point, which has been much discussed. However, having studied the question of what are the real limitations on the lower end of the market, I have become more and more convinced that it is not the lack of 100 per cent. mortgages, it is not the 11 per cent. interest rate or the size of the deposit, but is the general state of uncertainty created by the world economic situation. If people cannot see in what sort of job or position they are likely to be a year from now, they are reluctant to take on the risk of buying a house.

Rate Support Grant (Dorset)

Sir J. Eden: asked the Secretary of State for the Environment whether he can now say what rate support grant for 1975 will be available to the Dorset County Council.

Mr. Oakes: Complete details of the factors to be used in the grant calculations are not yet available. However, an estimate based on provisional information indicates that Dorset County Council's 1975–76 entitlement to the needs element of the rate support grant will be in the region of £24·2 million. In addition the county precept attracts indirectly some benefit from the resources element.

Sir J. Eden: To help both domestic and commercial ratepayers, will the Minister take further action to reduce local authority expenditure, in particular by transferring to central Government the full cost of teachers' salaries? Will he also call a halt to unnecessary expenditure on road development, much of which is causing widespread anxiety and upheaval in my constituency?

Mr. Oakes: The first part of the hon. Member's question relates to a subject which is being considered by the Layfield Committee, but of course that will not I can only emphasise again the provisions affect next year's rate. As for expenditure,


of the circular issued on 23rd December, to which my right hon. Friend has referred today, which urges on all local authorities the essential need to contain their expenditure this year to inescapable commitments.

Mr. Channon: Was the Secretary of State for Education and Science speaking on behalf of the whole Government when he said that it would be a retrograde step to transfer teachers' salaries in the way my hon. Friend suggested? If so, will the Minister take it from us that we strongly disagree with his right hon. Friend?

Mr. Oakes: As I said, this is being considered by the Layfield Committee. Certainly it would not be considered for this year.

Lorry Parks

Mr. Berry: asked the Secretary of State for the Environment what proposals he has for establishing a network of lorry parks.

Mr. Mulley: I am considering what more can be done to bring about the establishment of a network of lorry parks following a recent meeting in my Department of those concerned.

Mr. Berry: Does the Minister agree that it was always an urgent necessity to have more lorry parks but that it has now become all the more urgent because of his recently announced decision to curtail motorways and other major roads, which means that lorries will continue to use unsuitable streets and will have to be parked at night in residential areas? Will he therefore try to get a move on in establishing this important chain of lorry parks?

Mr. Mulley: I agree that it is desirable to make progress on the national network, but there have been initial difficulties in getting suitable sites. More recently there have been doubts whether such a scheme could be commercially viable. As regards parking in residential streets, I remind the hon. Gentleman that local authorities have extensive powers. I understand that within his constituency the local authorities concerned, Enfield and the GLC, are looking at various schemes.

Mrs. Dunwoody: Is my right hon. Friend aware that, far from providing new sites, there is an attempt on the part of many local authorities to curtail existing lorry parks? They are turning them over to private residential car parks and forbidding the parking of lorries. There is hardly any point in introducing restrictions on drivers' hours if one makes them drive longer distances to find somewhere to park for the night.

Mr. Mulley: If my hon. Friend will let me know of any particular difficulties, I will see what I can do. I stress, however, that local authorities are entitled to make decisions for themselves in matters within their jurisdiction, and this would appear to be such a category.

House Purchase (First-time Buyers)

Mr. William Hamilton: asked the Secretary of State for the Environment what progress he has made in his discussions with the building society representatives concerning new initiatives to help young people to buy their first homes.

Mr. Freeson: My right hon. Friend hopes to make a statement very shortly about the discussions he has had with building societies and builders about the present unsatisfactory situation in private house building, including the position of first-time buyers.

Mr. Hamilton: Does my hon. Friend agree that in place of that statement it might be better to produce a White Paper so that the House may have an opportunity for a debate? Will the statement or a White Paper include reference to the provision of timber-frame buildings—about which I made representations to my hon. Friend a little while ago—because there are hon. Members on both sides of the House who, having seen such houses, appreciate that they have many advantages, not least the cost advantage?

Mr. Freeson: The point my hon. Friend raises will not fall to be dealt with in the statement to which I have referred, but I hope that soon afterwards we shall be sending out circular advice which would cover that particular point about building construction. I shall consider with my right hon. Friend the suggestion about incorporating any ideas we have on these matters in a White Paper, though


I think that it would be better to await the contents of the statement before we pursue that idea further.

Mr. Michael Morris: Will the statement include any reference to policies to help the homeless, the figures for which have doubled under the present Government's housing legislation?

Mr. Freeson: I find myself at a loss for words to deal with the last point in that question. I had better ignore it because it was so ridiculously inaccurate. The question of tackling aspects of homelessness is being studied very vigorously. I suspect that it is being studied a good deal more vigorously than was the case under the previous administration.

Mrs. Winifred Ewing: Will the Minister, in any further discussions, urge building society representatives to explain to young couples that, whichever of them takes the mortgage, it is perfectly in order for the ownership to be in the joint names of both husband and wife?

Mr. Freeson: I should hope that it would not be necessary for me or my right hon. Friend to have to explain that to the building societies. I believe that a growing number of building society mortgages are issued on the basis of joint ownership. This is an increasing practice, which is certainly to be welcomed.

Mr. Scott: Does the Minister recognise that his astonishment is not good enough? He must know that the Rent Act 1974 has made the situation in many of our big cities very much worse, increased the number of homeless and dried up the supply of furnished accommodation. Will the statement deal with this?

Mr. Freeson: With great respect to the hon. Gentleman, it would be far better if instead of making general statements of that kind, either in the House or elsewhere, he would submit actual material to the Department—for which I have certainly called—in order that we may monitor the position and take appropriate action. We have not received evidence to suggest that the Rent Act 1974 has produced the effects to which reference has been made. It was only a matter of days from the enactment of that legislation that propaganda was being put out

to this effect, before anyone could possibly have been able to establish evidence. I suggest that all those now making noises on the Opposition side of the House should submit evidence to the Department so that we can take appropriate action. So far, not one of them has done so.

Mr. Cant: May I agree with the earlier remarks of my right hon. Friend the Secretary of State and say that it is the factor of uncertainty that dissuades a number of first-time buyers from entering the market? Believing as I do that they have more confidence in borrowing from local authorities, may I ask whether my hon. Friend will increase the limit in respect of reference to his Department for local authority purchases of houses from £250,000 to £500,000? Will he also review the whole procedure of the purchase of houses by local authorities so that it may be streamlined and quickened and so that vacant properties may be made available to first-time buyers from local authorities?

Mr. Freeson: It will be the position shortly that we shall have to review the operation of Circular 70/74 under which there has been this encouragement and provision for local authorities to expand their house purchase practices. It is certainly true that there are many empty properties in stress areas that remain un-purchased by local authorities or houseing associations, and there is considerable scope in that direction to bring them into housing use. I shall take note of my hon. Friend's suggestion that we should increase the ceiling limit on particular purchases, though I must say that under the circular there has been a considerable expansion of capital expenditure in this field, to a level which I believe will be sustained during the coming financial year.

Invalid Tricycles

Mr. Hannam: asked the Secretary of State for the Environment if he will now remove the exemptions which have been granted to exclude motor invalid tricycles from the safety requirements of the Motor Vehicles (Construction and Use) Regulations, in view of their high rate of injury accidents in comparison to small four-wheeled cars; and if he will make a statement.

Mr. Mulley: No, Sir. Motor invalid tricycles are subject to all the provisions of the Motor Vehicles (Construction and Use) Regulations except the requirement to fit a speedometer in the case of tricycles weighing less than 5 cwt., and the provisions about collapsible steering columns in the case of tricycles steered by a tiller.

Mr. Hannam: Does not the Minister agree that all the evidence, and even the latest report from his research laboratory, points to the inherent danger of three-wheeled vehicles? When will the Government carry out the first stages of the plan recommended by Baroness Sharp to phase out tricycles and introduce four-wheeled vehicles?

Mr. Mulley: With respect, that is a rather different question. The question of policy on these vehicles is one for my right hon. Friend the Secretary of State for Social Services. It could not be met by any change in the Motor Vehicles (Construction and Use) Regulations.

Mr. David Steel: The Minister will accept that the three-wheeled vehicles are not subject to the MOT test, as other vehicles are. Will he also accept that there is evidence that those who use these vehicles away from urban centres where they can be readily serviced are landing the taxpayer, let alone themselves, with very large bills as compared with the cost of the possible provision of standard four-wheeled minis with hand controls?

Mr. Mulley: I am aware, though it is not a matter for me, that there is a preference for four-wheeled rather than three-wheeled vehicles. The vehicles which are maintained by the Department of Health and Social Security are not subject to the MOT test, because that would be a total waste of resources. But where they are privately owned and not maintained by that Department, like any other vehicle they are subject to the test.

Improvement Grants

Mr. David Steel: asked the Secretary of State for the Environment whether he will now consider extending home improvement grants to include the installation of insulation schemes.

Mr. Freeson: The Housing Act 1974 requires as a condition of issue of an improvement grant that a property must

conform to prescribed standards of insulation. Grant is not available specially for this purpose but the cost of insulation should pay for itself through savings on fuel.

Mr. Steel: Does the Minister accept that this should be a matter for the Department of Energy as well and that if we are to have a comprehensive energy conservation policy it makes sense to encourage people to save fuel by insulating their homes more effectively?

Mr. Freeson: I certainly accept the general point that the hon. Gentleman has put forward. All that we are doing in this matter, not only in connection with improvement grants policy but in other respects too, is being done in very close consultation indeed with the Department of Energy. There is an interdepartmental advisory committee on this very aspect as well as others connected with it.

Mr. Rost: Is it not time that the Government stopped talking about this and got on with it, in view of the fact that our insulation standards are about the worst in Europe? The urgent need to save energy could be partly satisfied by giving discretionary improvement grants for existing homes.

Mr. Freeson: I do not accept that it is necessary to pay out public money for the purpose, but I accept that there is a need to increase insulation standards in this country. This has been advocated for a long time, but it is the present Government who have taken action to improve insulation standards.

BURMAH OIL COMPANY

The Secretary of State for Energy (Mr. Eric Varley): With permission, Mr. Speaker, I should like to make a Statement.
Just before Christmas the Burmah Oil Company approached the Government and the Bank of England about its difficulties in meeting in full the technical requirements of certain loan agreements, due to a fall in income and the contraction of the market value of its assets. Burmah is a major British company with widespread international interests and an important involvement in the North Sea.


We want to avoid any delay in developing the major fields of Ninian and Thistle.
Following consultation between the Treasury, my Department and the bank, it was therefore agreed that the bank would provide temporary financial support to enable the company to renegotiate its loan commitments and rationalise its activities, secured by the transfer of Burmah's unpledged holdings of the stock of BP and Shell to the bank. The bank offered its guarantee in support of certain substantial dollar borrowings for 12 months in the full expectation that it would be able to withdraw at the end of this period and leave the company to stand on its own.
The bank proposed to rely for its protection primarily on security taken from the group, which the bank judged to be adequate. The Government considered it right to guarantee the bank against any possibility of loss. I shall be seeking the approval of Parliament as necessary.
In return, Burmah confirmed its firm intention to proceed fully and as quickly as possible with the development of the Ninian and Thistle fields. It also undertook, in consideration for the support to be provided by the bank and the Government, to transfer to the Government, when required, 51 per cent. of its interest in commercial oilfields on the Continental Shelf. The precise terms of the participation will be negotiated between my Department and the company.
Discussions are continuing with the many interested parties. Some modification of the arrangements which I have described may well be needed. The bank will continue to act in close consultation with the Government; I shall keep the House informed.

Mr. Patrick Jenkin: While the whole House will have greeted with dismay the circumstances which forced this famous Scottish-based company to seek help from the authorities, we on this side of the House felt some sense of relief that it fell into the hands of the bank and not into the hands of the Secretary of State for Industry.
While, clearly, we must wait for Sir Ronald Leach's report of the details, will the right hon. Gentleman confirm that the immediate cause was the fall in the Stock Market values of Burmah's holdings in

BP and Shell, as a result of which the company found itself in technical breach—[HON. MEMBERS: "No."]—I am quoting the Secretary of State's own words—found itself in technical breach of its loan obligations? Is it the Government's view that no question of insolvency arises here—in other words, that there is no question of the Government finding themselves in a Beagle situation?
Secondly, the Burmah company has deposited its holding of over 20 per cent. of the equity of BP with the bank as security. Will the right hon. Gentleman assure the House that these shares remain Burmah's property and that there is no question of the Government taking the shares into public ownership?
Thirdly, it is clear that Burmah has been forced to cede 51 per cent. of its North Sea interest under duress. Can the Minister give a categorical assurance that the terms offered to Burmah will be no less favourable than those which will be offered to other companies? Will he explain what those terms are? Can he clarify the very opaque and obscure statement made by his right hon. Friend the Chancellor of the Duchy of Lancaster before the weekend? Is it not clear that on the taxation and participation front, because the Government have been meddling in matters that they do not understand, their North Sea oil policy is rapidly slithering into total shambles?

Mr. Varley: The Government did not seek the difficulties which Burmah is experiencing and we take no satisfaction from the situation. It has nothing to do with the Government's North Sea oil policies. The problems of Burmah were due to the fall in the value of assets, and one of the main difficulties which the company had was the tanker, operations. The question of the BP shareholding is still a matter for consideration, and I do not rule out the possibility of the Government acquiring it from the bank, but further thought must be given to that.

Mr. Hamling: Is my right hon. Friend aware that one of the chief contributions to the situation was mismanagement by Burmah, particularly in the Signal operation and not so much the tanker operations? Is my right hon. Friend aware also that the remarks made by the right hon. Member for Wanstead and Woodford


(Mr. Jenkin) are no contribution to solving the problems of Burmah and that they are merely an exercise in petty party politics?

Mr. Varley: I very much agree with my hon. Friend that that contribution from the right hon. Gentleman does not help the Burmah situation at all. There have been management problems. It is widely recognised that there will be management changes. The managing director has already resigned, and the director of the tanker operations has also gone. I am absolutely certain that further management changes will be announced, and, I hope, announced shortly.

Mr. Pardoe: Is the right hon. Gentleman aware that the difficulties which this company has met have come about largely as a result of following the advice of many politicians 10 years ago to do the sort of things in management which were done, and that it showed enterprise not wisely but too well?
Is the right hon. Gentleman also aware that the problems derive immediately from the collapse of the Stock Market and the collapse in confidence in the North Sea as collateral for borrowing, which has nothing to do with the Government's policy but has a great deal to do with the escalating costs of getting the oil ashore? What will the Government do to get the oil out of the North Sea and to provide investment? We shall not be able to borrow it. Even the last Conservative Government could not print money on this scale.

Mr. Varley: The fact that we could move to assist in these circumstances is assisting the North Sea oil policy. It may well be that the development in the Thistle and Ninian fields might not have gone ahead, but, as a result of the support which the company is now receiving and the back-up guarantee which is being given, it will be possible for work to be pressed ahead in the Ninian and Thistle fields. Far from harming our North Sea oil policy and objectives, the Government are assisting them.

Mr. Dalyell: Has my right hon. Friend noticed the tactful reticence of the Scottish National Party on this matter? Does not this situation prove once and for all

that winning oil from these inhospitable waters does not provide any kind of dripping roast in the form of extra benefits for Scots?

Mr. Varley: I am loath to get involved in an argument about Scottish nationalism, whether it assists in this situation or whether the Scottish National Party is reluctant to comment. I can tell my hon. Friend that it is the Government's intention to press forward as soon as possible with North Sea oil development and that we are being sucessful.

Mr. Skeet: Will the Minister explain what he means by saying that the profitability of the Burmah Oil Company will be the same with 49 per cent. participation as though it had 100 per cent. ownership? As the Bank of England has the right to sell 21·7 per cent. investment, in what circumstances will the Labour Government purchase it?

Mr. Varley: It is far too early to speculate on the BP shareholding which the bank now holds. It is possible for the Government to acquire the shareholding of BP, but it is not yet decided whether that should be done. I do not rule it out, but we need to see how the situation develops in the weeks and months ahead.

Mr. Stoddart: Is my right hon. Friend aware that the Burmah Company, whose head offices are in my constituency, in the course of its public statements has made no statement that Government interference has had anything to do with the present collapse? Indeed, it accepts that it has overstretched its operations, and that is why it needs Government assistance, which is very much welcomed in my constituency.
May I ask two questions? First, does it make sound sense for the company to be required to get rid of its assets in North America? Secondly, has my right hon. Friend had any discussions with the Burmah Oil Company about the protection of the jobs of its employees, particularly those in my constituency?

Mr. Varley: I understand that no significant redundancies are planned for the Burmah operations in the United Kingdom. As for the North American assets, both Burmah and the Bank of England are convinced that certain slimming-down


operations will have to take place. Some of the North American assets will have to be disposed of, and I think that is wise.

Mr. Teddy Taylor: Is the Secretary of State convinced that after this operation sufficient capital will be available to Burmah fully to develop both the Ninian and the Thistle fields? Is he aware that because of the traditional Scottish connection with Burmah many Scottish pension funds, which are already in a shaky situation, have heavy investments in the company? Will he therefore say what he considers to be the outlook for the profitability and the shares of the company?

Mr. Varley: The company hopes in due course after the slimming-down operation and after the disposal of some of its North American assets to operate successfully. There is no question about that; the company is confident that it can do that. However, I shall keep the House informed as necessary. I think I have already answered the question of the present hope for the Ninian and Thistle fields. Finance will be made available and the operations there will go ahead as speedily as possible.

Mr. Cant: As it is obvious that the position of Burmah is due very largely to gambles that did not come off and to generally bad management, will my right hon. Friend say in respect of one of the least successful of its management operations—the negotiations over the loan with the Chase Manhattan Bank—how much of the British taxpayers' money will actually find its way across the Atlantic to that bank?

Mr. Varley: It is much too early to answer in any detail the question my hon. Friend posed. There is the guarantee which the bank has offered on the $650 million loans, and the precise nature of any sterling banking facilities have yet to be agreed.

Mr. Gordon Wilson: Will the Minister accept, notwithstanding oil company propaganda to the contrary, that there still is a tremendous profit to be made out of North Sea oil and that it is advantageous to the community that there is a degree of public participation in it? Will he accept support from the Scottish National Party for the Government's action in the sense that the Government are following the

policy towards public participation that we blazed several years ago?

Mr. Varley: I have only just noticed that, if it is the case. I remember one famous occasion during the "short Parliament", if I may call it that, between February and October last year when we had a major debate on public ownership and participation and the hon. Member and his colleagues followed the Conservatives into the Lobby. I very much agree with the hon. Member this far—that North Sea oil is still an extremely profitable operation, and most of the oil companies recognise that.

AIRCRAFT INDUSTRY

The Secretary of State for Industry (Mr. Anthony Wedgwood Benn): I will with permission, Mr. Speaker, make a statement on public ownership of the aircraft industry.
It was announced in the Queen's Speech that legislation would be introduced this Session to bring the aircraft industry into public ownership, as part of our general industrial strategy. Our proposals are set out in detail in a consultative document published today. I am placing copies in the Library of the House and in the Vote Office. I plan to complete these consultations as soon as possible and introduce a Bill in good time for passage this Session.
We propose to vest in a new Aircraft Corporation the shares of any company in Great Britain which carries on the business of developing or manufacturing complete aircraft or guided weapons—but not including helicopters—the turnover of which, as shown in the accounts of its last financial year ending before 29th October 1974, together with that of its subsidiaries, exceeds £20 million. The companies which fall in this category are:

The British Aircraft Corporation Ltd.
Hawker Siddeley Aviation Ltd.
Hawker Siddeley Dynamics Ltd.

Together these companies account for about 80 per cent. of employment and turnover in the airframe and guided weapons sector.
The Aircraft Corporation will be operating in a highly competitive international environment. It should be able to adapt both its policies and its organisation


quickly in response to changing circumstances and subject to the approval of the Secretary of State be able to diversify into other activities where its capacities and skills can be advantageously employed.
The powers of the Secretary of State will be the minimum needed to secure Government influence over the main strategies of the corporation and to protect the public investment in it. Experience with other nationalised industries has shown that statutory provisions, however carefully drawn in the first instance, can sometimes prove unexpectedly rigid. We therefore intend to provide that the powers and duties of the corporation and the powers of the Secretary of State may be capable of amendment by statutory instrument subject to affirmative resolution in both Houses of Parliament. This will introduce an important new element of flexibility into the statutory arrangements governing relations with a nationalised industry.
The Government believe that the proposals set out in the consultative document provide the basis for a successful and efficient aircraft industry and will command the support of those who work in it.

Mr. Heseltine: Does the Secretary of State recognise that this statement has been eagerly awaited and will be widely welcomed by the competitors of our industry throughout the world? Will he tell the House how much the proposals will cost and what the form of compensation will be? Will he also say where he sees the new organisation fitting into the development of the European aerospace industry? Finally, does he realise that the distorted priorities of this statement will do much to reinforce the view that his Department is now a major aggravator of the economic and industrial crisis facing this country?

Mr. Benn: It comes oddly from a Government that first bankrupted the jewel of the British aero-engine industry—[Interruption.] and then nationalised it—[HON. MEMBERS: "It was you."]—who did more damage—[Interruption.] The right hon. Gentleman bankrupted—

Mr. Heseltine: rose—

Mr. Benn: —the Rolls-Royce aeroengine industry—

Mr. Heseltine: On a point of order, Mr. Speaker. Is the Secretary of State in order in making statements which he knows to be totally untrue?

Mr. Speaker: The Secretary of State has said nothing out of order.

Mr. Benn: It ill befits the hon. Gentleman and the Leader of the Opposition, who first bankrupted and then nationalised Rolls-Royce—

Hon. Members: No.

Mr. Skeet: You are the guilty man.

Mr. Benn: —to comment on a policy of the kind I have put forward today. The right hon. Gentleman—

Mr. Raphael Tuck: On a point of order, Mr. Speaker. I distinctly heard the hon. Member for Stretford (Mr. Churchill) call out, "He is a liar".

Mr. Speaker: Order. If the House will be a little quieter, I might be able to hear the hon. Member's point of order. Will he please repeat what he said?

Mr. Tuck: I distinctly heard the hon. Member for Stretford call out, "He is a liar".

Mr. Speaker: I must ask the hon. Member for Stretford whether he said that.

Mr. Churchill: Yes, indeed, Mr. Speaker.

Mr. Speaker: Will the hon. Member withdraw that comment? [HON. MEMBERS: "No".] Order. That is not an expression that I am permitted to allow. Will the hon. Member withdraw it?

Mr. Churchill: May I withdraw that remark and say that the right hon. Gentleman was guilty of a terminological inexactitude?

Mr. Speaker: It saves time, when an hon. Member has used an unparliamentary term, if it is withdrawn without qualification.

The Minister of State, Department of Industry (Mr. Eric Heffer): On a point of order, Mr. Speaker. I distinctly


heard the hon. Member for Henley (Mr. Heseltine) refer to my right hon. Friend as a liar. I would ask that that statement should be withdrawn.

Mr. Heseltine: Further to that point of order. On mature reflection I believe that my hon. Friend the Member for Stretford (Mr. Churchill) used a more accurate terminology, and I withdraw my original remark.

Mr. Speaker: Did the hon. Gentleman say that the right hon. Gentleman was a liar?

Mr. Heseltine: Yes, I did, Mr. Speaker.

Mr. Speaker: The hon. Gentleman should withdraw it unconditionally.

Mr. Heseltine: I do.

Mr. Heath: I wish to raise what I consider to be an important point about the conduct of affairs in the House. These difficulties arise because the Secretary of State, in particular, constantly makes statements in the Chamber which everybody knows bear no resemblance to the truth. If the level of debate is always to be lowered in that way, such incidents are unavoidable.

Mr. Speaker: It would be in the interests of the House if both questions and statements were less provocative.

Mr. Benn: The hon. Gentleman raised two other questions—

Hon. Members: "Withdraw."

Mr. Speaker: Order. It is in order to say that an industry has been bankrupted by a Government action. It may be correct or incorrect. It is certainly not out of order.

Mr. Dykes: I apologise for continuing this with a further point of order. Would you arrange, Mr. Speaker, for all hon. Members on the Opposition benches who believe that the Secretary of State was at least inaccurate to rise?

Mr. Speaker: Certainly not.

Mr. Benn: Compensation provision will be fair. As to the hon. Gentleman's question about Europe, he knows as well as I do that the industry has collaborative arrangernents—I think nearly a thousand in all—not only with European manufacturers but with United States and other

manufacturers. We intend international collaboration to continue and to be encouraged.

Mr. Whitehead: Is my right hon. Friend aware that those of our constituents who already have experience in the publicly-owned aero-engine industry will welcome his statement, although I think that they would all be somewhat bemused by the extraordinary scenes that followed it? In view of what my right hon. Friend said about the new public corporation being allowed to diversify, may I ask him how he sees the rôle of Hawker Siddeley within that corporation, as the firm has already diversified very far out of aviation as we understand it?

Mr. Benn: I shall do my best to answer. I confirm that Rolls-Royce in public ownership has done very well and has enjoyed the confidence of the people who work in it. My statement described the companies falling within the category I have described—BAC, Hawker Siddeley Aviation and Hawker Siddeley Dynamics. It will be open to the new corporation to diversify into areas which are capable of utilising the skill and ability of the people in the corporation, subject to the Secretary of State's approval.

Mr. Warren: Why has the Secretary of State not told the workers in the British aircraft industry that the people whom he is approaching to run his new national corporation are the very people at present managing the industry? Is not the exercise one in old-time politics, copied from Karl Marx once again, to nationalise the means of production, distribution and exchange, which is out of date and irrelevant for such a modern industry?

Mr. Benn: We advocated public ownership fully in two elections in 1974, and were assisted in our work of explaining the policy by Conservative Members, who contributed notably to seeing that everyone knew what our policy for the aircraft industry was. I should like to put on record my gratitude to the Leader of the Opposition, Aims of Industry and others who guaranteed that the policy was widely understood. It commanded wide support among those who work in the industry. It is a better way than nationalisation via a process of bankruptcy. It is not true that appointments have been made to the new Aircraft Corporation, nor does the


speculation about appointments that might be made to an organising committee bear any resemblance to the truth.

Mr. Tuck: Can my right hon. Friend give the House any hope of saving the HS 146 from being scuttled? It is the only viable civil aircraft we have to offer for the 1980s. If it is not saved, my right hon. Friend may find when he takes over Hawker Siddeley that there is nothing to take over.

Mr. Benn: I made a clear statement about the position at the time. Since I last reported to the House, there has been a tripartite meeting of the management of Hawker Siddeley, the unions concerned and myself. These meetings are continuing to discuss the future of the project. I made it quite clear that my statement about not being able to provide 100 per cent. funding at the time did not constitute a cancellation. The organising committee of the new Aircraft Corporation, which, under normal practice, would be set up in an early stage of legislation, will be able to take the project on board to consider as part of its corporate strategy.

Mr. David Steel: What percentage of the total output of the three companies has been in the form of public contracts, either for the British Government or other Governments in recent years? What has been the level of public financial assistance to the companies?

Mr. Benn: In the consultative document the figures are given since 1966, but I can give the House the figures of public money that has, in one form or another, gone into the aircraft industry since 1964. Government support to the airframe sector for civil projects has been £350 million. Government expenditure on military research and development has been £450 million, and Government military procurement has been £1,100 million. Sales to the United Kingdom home civil market, mainly public sector purchases, have been £700 million. I think that it is reasonable to argue that in one way and another the relationship between the taxpayer and the British aircraft industry has been close. Under the arrangements I propose, we hope to be able to get it on a better basis.

Mr. Powell: What does the right hon. Gentleman expect will be the effect of the decision he has announced upon Short Brothers, Belfast? Will he ensure that the operations of that company are in no way prejudiced?

Mr. Benn: I assure the right hon. Gentleman that they are not prejudiced. We have seen Shorts in the context of the Northern Ireland economy. As the right hon. Gentleman will know, there is a big public stake in Shorts. Nothing I have said affects that position.

Mr. Cryer: Against the background of the hollow indignation from the Opposition, I assure my right hon. Friend that his announcement has the support of this side of the House and is warmly welcomed. What arrangements will he introduce to carry out the other part of Labour's programme of public ownership, that of introducing workers' participation and control, as an example to the rest of industry?

Mr. Benn: My hon. Friend will find special reference to that matter in paragraph 11 of the consultative document, but in view of the importance of what he said I should like to read the following sentence:
Industrial democracy should … develop organically from the views and proposals put forward by the management, workers and trade unions concerned.
The Government will consider, in the light of present consultations with all the parties in the industry, how the process can best be encouraged. I should like to take this opportunity of making clear that what are being brought into the public sector are some of the finest skills this country has produced, largely financed by public money. If there were more concern with those who make and design aircraft and manage the aircraft corporations, and less with the interests which the Conservative Party has espoused, we should make more sense of this and other industries.

Mr. Michael McNair-Wilson: Will the right hon Gentleman tell us what effects nationalisation of the airframe industry as he outlines will have on employment prospects in the industry?

Mr. Benn: There is no direct connection in the sense in which it might be


interpreted. Clearly everyone in the industry and others know—I have made this clear in all the speeches that I have made to aircraft workers—that in the end an industry must survive on its market. There are at present problems concerning the world market although we believe that it will recover. The fuel crisis is especially affecting the aircraft market. I believe that the general effect will be to boost confidence in exactly the same way as it was possible for Rolls-Royce to go ahead with the—524 engine recently in circumstances that, in my judgment, would not have been possible if it had had to rely upon market financing.

Mrs. Hayman: Is my right hon. Friend aware that his statement will be welcomed by Hawker Siddeley Aviation in Hatfield and in other constituencies? Does he realise that they would welcome even more a positive statement of faith in the civil airframe industry, particularly design staff, technology and resources in human terms, to which my right hon. Friend has referred, by a more definite commitment on the HS 146 project. It is the only new civil aviation project that we have. I think that workers in my constituency would like me to point out that they are very concerned about the Government putting off a decision until the Aircraft Corporation is formed. That is a delay which will lose markets. They would rather have an answer on the project now.

Mr. Benn: I appreciate what my hon. Friend has said. Along with other Members from both sides of the House she has argued her case with great fluency over the past few months. She will also recognise that I set up the tri-partite meeting, and that we are now able to anticipate the establishment of an organising committee which will be able to consider the matter in a different context. We have been as good as our word. That is a matter that my hon. Friend could properly take back to her constituents who work for Hawker Siddeley. I am well aware of the welcome that my statement will receive in the industry. It has been my privilege to work out this policy with those representing the workers in the industry. There is no doubt that my statement will receive a warm welcome from them.

Mr. Heath: As the right hon. Gentleman has constantly mentioned Rolls-

Royce, will he now acknowledge once and for all that Rolls-Royce went into liquidation because it was unable to carry out the terms of the contract on the RB-211 engine? The contract was negotiated under the right hon. Gentleman's authority as a Minister and under his personal persuasion. That is what drove Rolls-Royce into liquidation. The plain fact is that to put the whole of the aircraft industry into similar hands will have similar disastrous consequences.
The right hon. Gentleman has produced no justification for the policy which he has put forward today. He has less than 40 per cent. of the votes of the British people in support of it. The skills of the people in the British aircraft industry and the design teams were built up not by any Government but by private enterprise. It was private enterprise that was responsible for the establishment of the people to whom he is now paying tribute.
Lastly, does the right hon. Gentleman recognise that the measures that he has put forward will be opposed by my right hon. and hon. Friends by means of all the parliamentary procedures under our control?

Mr. Benn: The right hon. Gentleman has questioned our mandate. Will he please draw the attention of the House to the reference in his 1970 manifesto about his desire to bring Rolls-Royce into public ownership? He had no mandate for that. He campaigned vigorously against public ownership. Then, as he knows very well, within a few months of coming to power his own Government confirmed the RB-211 contract. The right hon. Member for Knutsford (Mr. Davies), who was then the Minister responsible, made a statement in the House in 1970 confirming that the project would go ahead and announcing a tranche of money. When Rolls-Royce went bankrupt the right hon. Gentleman addressed a meeting of Young Conservatives the following day. He said that this was the lesson that we must all learn. When the final compensation terms were announced it was clear that Rolls-Royce need never have gone into bankruptcy. The right hon. Gentleman inflicted very serious and unnecessary damage on the British aero-engine industry. He also endangered the reputation of Britain as


a partner with Lockheed and others in the United States.

Mr. Heath: Once again the Minister has come forward with both untruths and half truths. The plain fact is that Rolls-Royce was liable to damages up to £400 million. The company knew that, and it is a public fact. That was why it was driven into liquidation by the contract made under the right hon. Gentleman's ministership. What we had to do was to try to rescue Rolls-Royce from the right hon. Gentleman's sins. The plain fact was that the company's liabilities were of such a scale that it could not be rescued from the disaster.

Mr. Benn: The right hon. Gentleman should consult the record. He will find that in July 1970, after the Labour Government left office, the chairman of Rolls-Royce made it clear at the annual meeting that in his judgment there were no problems regarding the funding of the RB-211. That judgment was confirmed in October by the Minister responsible when he came forward with a further tranche. As the right hon. Gentleman says, his Government chose bankruptcy so as to default on obligations confirmed by the Cabinet only some months earlier. That did great damage, and needless damage, to the reputation of the British aircraft industry. I ask the right hon. Gentleman to withdraw what he said.

Mr. Onslow: On a point of order, Mr. Speaker. By way of comment on previous angry scenes and on what the right hon. Gentleman has just said, I point out that I happen to be wearing the mourning tie that was issued to mark the bankruptcy of the Beagle Aircraft Company, for which the right hon. Gentleman bears sole responsibility.

Mr. Speaker: Order. The kind of tie that a Member wears has nothing to do with the Chair. Mr. Radice.

INDUSTRIAL DEMOCRACY

4.7 p.m.

Mr. Giles Radice: I beg to move,
That leave be given to bring in a Bill to amend the Companies Act 1967 and to make further provision, in regard to companies and nationalised industries, for trade union representation on supervisory boards.
What I and my supporters are seeking to do is to give legislative form to the pledges on industrial democracy made in Labour Party manifestos at both the 1974 elections. I believe that there is now a considerable body of support for an extension of industrial democracy amongst workers and their representatives at shop floor level, amongst national trade unions and in the TUC itself. The ideas behind the Bill are largely drawn from the TUC's report to last year's congress.
I believe that there is a growing recognition that it is no longer enough to negotiate wages and conditions and to leave the rest to management. Decisions on closures, mergers, the location of plant and the whole shape of future corporate strategy are so important that they largely determine the living standards and working conditions of most employees. No wonder that workers and their representatives are now demanding a say in management.
Workers and their representatives want more control over the key decisions that affect their working lives, and they are asking for action by the present Government. There was no mention of industrial democracy in the Queen's Speech, and it is because of that omission that I and my supporters, who are from many wings and sections of the Parliamentary Labour Party, are bringing the Bill before the House.
Perhaps the most important and most immediately realisable objective of the Bill is to ensure that 50 per cent. of the members of the boards of nationalised industries are employed representatives elected through trade union machinery. At the moment there are trade unionists on the boards of nationalised industries, but they are there in their own right and not as representatives. We believe that if this Bill becomes law it will be possible to move very quickly in the public sector.
However, in the private sector the situation is far more complicated. The Bill would first change the Companies Act 1967 so that the directors of a company would be legally obliged to take account of the interests and the point of view of employees. It would also change company structure, initially only for those companies employing more than 2,000 workers, by setting up a two-tier board system with a supreme supervisory board over a smaller executive body. Over half the members of the supervisory board would be employee representatives elected through trade union machinery. The supervisory board would have the final say on such major questions as large-scale investment, closures and mergers, plant location, redeployment, the appointment of the executive board, and so on. It would be right for employees in the private sector to be able to choose whether they wanted a two-tier board system and their own representatives on the supervisory boards.
In non-union firms the choice would be supervised by the Conciliation and Arbitration Service. In organised firms it would be conducted through trade union machinery. A non-mandatory system in the private sector, such as I have just described, would, I believe, satisfy those trade unions which expressed reservations at last year's TUC conference, including the AUEW and the National Union of General and Municipal Workers, of which I am a sponsored Member of Parliament.
The possibility of choice would go a long way towards satisfying those who, though in favour of industrial democracy, believe that it would be wrong to impose any one system. We do not believe, as some fear, that employee representation on boards would lead to the emasculation of the trade union movement. On the contrary, the effect of the proposals contained in the Bill, such as employee-directors as representatives, the 50 per cent. parity representation, the election through trade union machinery, is to extend collective bargaining into the boardroom, the only difference from normal bargaining being that employee-directors would be putting forward their side of the argument in a wider context and would be concerned with the higher level of decision making.
I understand that the CBI is hostile to the ideas on which this Bill is based. No doubt the CBI view has influenced the attitude of the major Opposition party, although only a year ago the Conservative Government promised in the Queen's Speech a White Paper on industrial democracy.
I should like to make it clear that efficient, up-to-date management will have nothing to fear from this Bill. It will have to justify its actions not by reference to a sterile, out-dated managerial prerogative but in terms of relevance and effectiveness. Only managements living in the past will have to change, and rightly so.
To those who claim that only management has the right to manage, we say that workers who play such an essential part in the success of an enterprise should have a right to their say. Of those who argue that only managers have the necessary skills, we ask "Why is management so eager to promote shop stewards and to attract trade union officials to join their ranks?" To those who fear trade union independence, we point out that normal collective bargaining already involves participation. What is at stake is not the principle but the form of the participation.
The Industrial Democracy Bill is the natural follow-up to the Trade Union and Labour Relations Act and to the proposed Employment Protection Bill. If the Government will commit themselves quickly to their own Bill, we shall be delighted to withdraw this Bill at a later stage. However, in the absence of that commitment, I ask leave of the House to bring in this Bill.

4.15 p.m.

Mr. Nicholas Ridley: rose—

Mr. Deputy Speaker (Mr. George Thomas): Order. Unnecessary as it may seem, I am obliged to ask the hon. Member whether he is seeking to oppose the Bill?

Mr. Ridley: Yes, Mr. Deputy Speaker. As you have already stated, it is my intention to suggest that leave be not given to bring in the Bill.
The hon. Member for Chester-le-Street (Mr. Radice) has made his intention clear before today. In a recent newspaper article, I read a report saying that his purpose was to force the Government to make clear their position. The report continued:
Supporters of the Bill believe that the Secretary for Employment, Mr. Foot, is in favour of legislation, but that the Secretary for Industry, Mr. Benn the other Minister most affected, is much cooler.
I do not believe that the House is the right place in which to smoke out the controversial and difficult figures on the Treasury Bench who are at loggerheads, nor do I believe that the House is in any mood to digest any more legislation. We have had a veritable avalanche of Bills already. We have just heard that we are to have another Bill, concerning aviation. In his statement about that, the Secretary of State for Industry went out of his way to say that industrial democracy should develop organically and should not be legislated upon. The conflicts in the Labour Party should not be resolved in the House of Commons, especially when we have already plenty to do to supervise the legislation which has been produced by a profligate administration who are spending our money faster than they should.
Starting with the substance of the Bill, the hon. Gentleman surprised me by making a speech on the subject without once mentioning the words "industrial efficiency". He must agree that we face in our industrial history a period of grave crisis, that we have clear illiquidity in many companies, that we are not as competitive in the world as we should be, that we are losing our share of the market, and that imports are often cheaper than home-produced goods. He must be aware that we have a very serious situation, due, if I may now be more controversial, to our failure to use modern machinery and to make sufficient investments in that modern machinery to increase productivity per man.
Will the hon. Gentleman's proposals be more likely to increase our industrial efficiency and the use of machinery and research than if those proposals are not put into effect? When I hear him speaking about the rights of employees, the rights of trade unions and what people

would like to see happen, I am, to say the least, suspicious. So often I have heard the demands of trade unions, repeated this afternoon by the Secretary of State for Industry and by the hon. Gentleman, to the effect that trade unions should have control over whether certain plants should close down when they become out of date and inefficient, whether new machinery should be manned properly or over-manned, and whether the major strategic industrial decisions should be taken by those who are responsible for the proper husbanding of the capital resources employed or by those who are responsible for the working of the machinery.
It is the natural and proper job of a trade union to force the maximum out of the employers and to cause the minimum of disturbance to their members. Naturally, they fight to preserve many jobs and to preserve old-fashioned techniques which affect employment in industry. I have every sympathy with them and with those who are displaced by modern techniques. However, if the hon. Gentleman is seriously suggesting that we should now set up a system whereby half the members serving on the supervisory boards in private industry and the nationalised boards should be the directly appointed representatives of those same trade unions, he is making a plea for greater industrial inefficiency.
This is a matter that the trade unions have yet to prove. They have yet to prove that they can rid our industry of over-manning, restrictive practices and encumbrances upon the use of the most modern techniques and of the minimum number of people to work modern machinery. For them to seek to go into this kind of industrial democracy before they have proved that is to seek to retard still further our recovery as an industrial nation.
The hon. Member for Chester-le-Street was at least honest about what he wanted his Bill to do. He wanted a two-tier board system for companies with more than 2,000 employees, and he wanted half the supervisory board composed of workers who were appointed by the relevant trade unions. "Elected" is a word which I did not hear during the hon. Gentleman's remarks. If he meant that, I am at least encouraged to hear it. But if we are to have a system of this kind, why


should not we have the workers themselves in the plant or industry elect the directors? Why does it have to be the trade unions which are in command of this? It puts the trade unions in a very difficult position. The trade unions exist to further the interests of the work force. If the trade unions are to appoint directors, how can they decide "Yes, we are sorry, but this plant must be closed, and this machine must be manned by only two men rather than six."? How can trade unions be put in a position where they have two duties, the one contrary to the other?
This is one reason why the hon. Member for Chester-le-Street has got into trouble with his own trade union, the National Union of General and Municipal Workers. According to the same newspaper article,
The AUEW and the NUGMW have expressed on this score objections
to what the hon. Gentleman proposes. It is, of course, quite wrong to mix up the function of a trade union, which is to protect and increase the wages of the work force, with that of management, which is to earn those wages by the proper stewardship of capital.
If we take the examples that we have in the nationalised industries, especially in the British Steel Corporation where something along these lines has been tried, the evidence is not that it leads to greater mobility of labour and greater efficiency in the use of capital resources. The evidence is that more and more people find it a convenient way of earning a perpetual living, ignoring industrial logic and the need for change.

In our industry we need a more adventurous spirit from managers, trade unions and work people. It is a spirit which involves moving from one industry to another as one grows and another declines. It involves manning machines to the minimum required, as was done during the three-day working week without much drop in production. It is a spirit which will not shackle our industry in the strait jacket of procedures such as those proposed by the hon. Member for Chester-le-Street.

It is very important to bring together the entire work force of the country, along with management, in the activities of their firms or their nationalised industries. I support entirely that part of the hon. Gentleman's objective. But, like the Secretary of State for Industry, I believe that it is better done organically. It is better left to each concern to evolve the way that it can do it best, be it through works councils, worker directors, some form of participation, or even perhaps the two-tier board system. For us to seek to lay further burdens on already hard-pressed management by legislating some firm pattern in matters like this would retard and eventually stop industrial development itself.

I ask the House to deny leave to the hon. Member for Chester-le-Street to bring in his Bill.

Question put pursuant to Standing Order No. 13 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of Public Business):—

The House divided: Ayes 250, Noes 124.

Division No. 52.]
AYES
[4.23 p.m.


Allaun, Frank
Brown, Hugh D. (Provan)
Cryer, Bob


Archer, Peter
Brown, Robert C. (Newcastle W)
Cunningham, Dr J. (Whiteh)


Atkins, Ronald (Preston N)
Buchan, Norman
Dalyell, Tam


Atkinson, Norman
Buchanan, Richard
Davidson, Arthur


Bagier, Gordon A. T.
Butler, Mrs Joyce (Wood Green)
Davies, Ifor (Gower)


Barnett, Guy (Greenwich)
Callaghan, Jim (Middleton &amp; P)
Deakins, Eric


Barnett, Rt Hon Joel
Campbell, Ian
Delargy, Hugh


Bates, Alf
Canavan, Dennis
Dempsey, James


Bean, R. E.
Carmichael, Neil
Doig, Peter


Beith, A. J.
Carter, Ray
Dormand, J. D.


Bennett, Andrew (Stockport N)
Carter-Jones, Lewis
Douglas-Mann, Bruce


Bidwell, Sydney
Cartwright, John
Duffy, A. E. P.


Biggs-Davison, John
Clemitson, Ivor
Dunlop, John


Bishop, E. S.
Cocks, Michael (Bristol S)
Dunwoody, Mrs Gwyneth


Blenkinsop, Arthur
Cohen, Stanley
Eadle, Alex


Booth, Albert
Coleman, Donald
Edelman, Maurice


Boothroyd, Miss Betty
Colquhoun, Mrs Maureen
Edge, Geoff


Bottomley, Rt Hon Arthur
Cook, Robin F. (Edin C)
Edwards, Robert (Wolv SE)


Boyden, James (Bish Auck)
Cox, Thomas (Tooting)
Ellis, John (Brigg &amp; Scun)


Bradley, Tom
Craigen, J. M. (Maryhill)
Ellis, Tom (Wrexham)


Broughton, Sir Alfred
Cronin, John
English, Michael




Ennals, David
Lamborn, Harry
Rooker, J. W.


Evans, Gwynfor (Carmarthen)
Lamond, James
Roper, John


Evans, Ioan (Aberdare)
Leadbitter, Ted
Ross, Stephen (Isle of Wight)


Evans, John (Newton)
Lewis, Arthur (Newham N)
Ross, Rt Hon W. (Kilmarnock)


Ewing, Harry (Stirling)
Lewis, Ron (Carlisle)
Rowlands, Ted


Fernyhough, Rt Hon E.
Lipton, Marcus
Sedgemore, Brian


Fitch, Alan (Wigan)
Litterick, Tom
Selby, Harry


Fitt, Gerard (Belfast W)
Loyden, Eddie
Shaw, Arnold (Ilford South)


Flannery, Martin
Luard, Evan
Sheldon, Robert (Ashton-u-Lyne)


Fletcher, Raymond (Ilkeston)
Lyon, Alexander (York)
Silverman, Julius


Fletcher, Ted (Darlington)
Lyons, Edward (Bradford W)
Skinner, Dennis


Forrester, John
Mabon, Dr J. Dickson
Small, William


Fowler, Gerald (The Wrekin)
McCartney, Hugh
Smith, John (N Lanarkshire)


Freeson, Reginald
McElhone, Frank
Snape, Peter


Freud, Clement
MacFarquhar, Roderick
Spearing, Nigel


Garrett, John (Norwich S)
Mackenzie, Gregor
Spriggs, Leslie


Garrett, W. E. (Wallsend)
McMillan, Tom (Glasgow C)
Stallard, A. W.


George, Bruce
Madden, Max
Steel, David (Roxburgh)


Gilbert, Dr John
Magee, Bryan
Stewart, Rt Hn M. (Fulham)


Ginsburg, David
Mahon, Simon
Stoddart, David


Golding, John
Marks, Kenneth
Stott, Roger


Gould, Bryan
Marquand, David
Strang, Gavin


Gourlay, Harry
Marshall, Dr Edmund (Goole)
Summerskill, Hon Dr Shirley


Graham, Ted
Marshall, Jim (Leicester S)
Swain, Thomas


Grant, George (Morpeth)
Meacher, Michael
Taylor, Mrs Ann (Bolton W)


Grant, John (Islington C)
Mellish, Rt Hon Robert
Thomas, Dafydd (Merioneth)


Grimond, Rt Hon J.
Mendelson, John
Thomas, Ron (Bristol NW)


Grocott, Bruce
Mikardo, Ian
Thorne, Stan (Preston South)


Hamilton, James (Bothwell)
Millan, Bruce
Tierney, Sydney


Hamilton, W. W. (Central Fife)
Miller, Dr M. S. (E Kilbride)
Tinn, James


Hamling, William
Miller, Mrs Millie (Ilford N)
Tomlinson, John


Hardy, Peter
Mitchell, R. C. (Soton, Itchen)
Torney, Tom


Harper Joseph
Molloy, William
Tuck, Raphael


Harrison, Walter (Wakefield)
Moonman, Eric
Urwin, T. W.


Hatton, Frank
Morris, Alfred (Wythenshawe)
Varley, Rt Hon Eric G.


Hayman, Mrs Helene
Morris, Charles R. (Openshaw)
Wainwright, Edwin (Dearne V)


Hooley, Frank
Morris, Rt Hon J. (Aberavon)
Wainwright, Richard (Colne V)


Hooson, Emlyn
Mulley, Rt Hon Frederick
Walden, Brian (B'ham, L'dyw'd)


Horam, John
Murray, Ronald King
Walker, Terry (Kingswood)


Howells, Geraint (Cardigan)
Newens, Stanley
Watkins, David


Hoyle, Douglas (Nelson)
Noble, Mike
Watkinson, John


Huckfield, Les
Oakes, Gordon
Weetch, Ken


Hughes, Rt Hon C. (Anglesey)
Orbach, Maurice
Weitzman, David


Hughes, Mark (Durham)
Orme, Rt Hon Stanley
Wellbeloved, James


Hughes, Robert (Aberdeen N)
Ovenden, John
White, Frank R. (Bury)


Hughes, Roy (Newport)
Owen, Dr David
White, James (Pollok)


Hunter, Adam
Padley, Walter
Whitehead, Phillip


Irvine, Rt Hon Sir A. (Edge Hill)
Pardoe, John
Whitlock, William


Jackson, Miss Margaret (Lincoln)
Park, George
Wigley, Dafydd


Janner, Greville
Parker, John
Willey, Rt Hon Frederick


Jay, Rt Hon Douglas
Parry, Robert
Williams, Alan Lee (Hornch'ch)


Jenkins, Hugh (Putney)
Pavitt, Laurie
Williams, W. T. (Warrington)


John, Brynmor
Peart, Rt Hon Fred
Wilson, Alexander (Hamilton)


Johnson, James (Hull West)
Phipps, Dr Colin
Wilson, William (Coventry SE)


Johnson, Walter (Derby S)
Prescott, John
Wise, Mrs Audrey


Jones, Alec (Rhondda)
Price, William (Rugby)
Woodall, Alec


Jones, Barry (East Flint)
Radice, Giles
Woof, Robert


Jones, Dan (Burnley)
Rees, Rt Hon Merlyn (Leeds S)
Wrigglesworth, Ian


Kaufman, Gerald
Richardson, Miss Jo
Young, David (Bolton E)


Kelley, Richard
Roberts, Albert (Normanton)



Kerr, Russell
Roberts, Gwilym (Cannock)
TELLERS FOR THE AYES:


Kilroy-Silk, Robert
Robertson, John (Paisley)
Mr. Ernest G. Perry and


Kinnock Neil
Roderick, Caerwyn
Mr. James Sillars.


Lambie, David
Rodgers, George (Chorley)





NOES


Adley, Robert
Cockcroft, John
Grieve, Percy


Alison, Michael
Dodsworth, Geoffrey
Grist, Ian


Baker, Kenneth
Drayson, Burnaby
Hall, Sir John


Banks, Robert
Durant, Tony
Hamilton, Michael (Salisbury)


Bennett, Dr Reginald (Fareham)
Edwards, Nicholas (Pembroke)
Hannam, John


Benyon, W.
Elliott, Sir William
Harvie Anderson, Rt Hon Miss


Berry, Hon Anthony
Finsberg, Geoffrey
Hawkins, Paul


Biffen, John
Fookes, Miss Janet
Hordern, Peter


Body, Richard
Fox, Marcus
Irving, Charles (Cheltenham)


Boscawen, Hon Robert
Fraser, Rt Hon H. (Stafford &amp; St)
Jenkin, Rt Hon P. (Wanst'd &amp; W'df'd)


Bowden, A. (Brighton, Kemptown)
Gardiner, George (Reigate)
Kellett-Bowman, Mrs Elaine


Boyson, Dr Rhodes (Brent)
Gilmour, Rt Hon Ian (Chesham)
Kimball, Marcus


Brown, Sir Edward (Bath)
Godber, Rt Hon Joseph
King, Tom (Bridgwater)


Budgen, Nick
Goodhart, Philip
Knight, Mrs Jill


Burden, F. A.
Goodhew, Victor
Lamont, Norman


Carlisle, Mark
Gow, Ian (Eastbourne)
Lane, David


Churchill, W. S.
Gower, Sir Raymond (Barry)
Lawrence, Ivan







Le Merchant, Spencer
Osborn, John
Speed, Keith


Lester, Jim (Beeston)
Page, Rt Hon R. Graham (Crosby)
Spence, John


Lewis, Kenneth (Rutland)
Parkinson, Cecil
Spicer, Jim (W Dorset)


Lloyd, Ian
Pattie, Geoffrey
Spicer, Michael (S Worcester)


McAdden, Sir Stephen
Peyton, Rt Hon John
Stainton, Keith


McCrindle, Robert
Pink, R. Bonner
Stanbrook, Ivor


Macfarlane, Neil
Powell, Rt Hon J. Enoch
Stanley, John


McNair-Wilson, P. (New Forest)
Pym, Rt Hon Francis
Steen, Anthony (Wavertree)


Marten, Neil
Raison, Timothy
Stokes, John


Mates, Michael
Rathbone, Tim
Stradling Thomas, J.


Mather, Carol
Rees, Peter (Dover &amp; Deal)
Thomas, Rt Hon P. (Hendon S)


Maude, Angus
Rees-Davies, W. R.
Townsend, Cyril D.


Mawby, Ray
Renton, Rt Hon Sir D. (Hunts)
Wakeham, John


Meyer, Sir Anthony
Ridsdale, Julian
Walters, Dennis


Miller, Hal (Bromsgrove)
Roberts, Michael (Cardiff NW)
Warren, Kenneth


Mills, Peter
Rodgers, Sir John (Sevenoaks)
Weatherill, Bernard


Mitchell, David (Basingstoke)
Rossl Hugh (Hornsey)
Wells, John


Montgomery, Fergus
Rost, Peter (SE Derbyshire)
Wiggin, Jerry


Morgan-Giles, Rear-Admiral
Royle, Sir Anthony
Winterton, Nicholas


Morris, Michael (Northampton S)
Scott, Nicholas
Younger, Hon George


Morrison, Charles (Devizes)
Shaw, Giles (Pudsey)



Morrison, Peter (Chester)
Shepherd, Colin



Neave, Airey
Shersby, Michael
TELLERS FOR THE NOES:


Nelson, Anthony
Sims, Roger
Mr. Patrick Cormack and


Neubert, Michael
Sinclair, Sir George
Mr. Nicholas Ridley.


Onslow, Cranley
Skeet, T. H. H.

Question accordingly agreed to.

Bill ordered to be brought in by Mr. Giles Radice, Mr. Jack Ashley, Mr. T. W. Urwin, Mr. Neil Kinnock, Mr. John Horam, Mr. Phillip Whitehead, Mr. James Sillars, Dr. John A. Cunningham, Mr. David Watkins, Mr. A. E. P. Duffy, Mr. Jeffrey Rooker, and Mr. Michael English.

INDUSTRIAL DEMOCRACY

Mr. Giles Radice accordingly presented a Bill to amend the Companies Act 1967 and to make further provision, in regard to companies and nationalised industries, for trade union representation on supervisory boards: and the same was read the First time; and ordered to be read a Second time upon Friday 28th February and to be printed. [Bill 60.]

Orders of the Day — FINANCE BILL

Clauses 5, 14, 16, 17, 33 and 49 referred to in the Order of the House [17th December 1974].

Considered in Committee.

[Mr. GEORGE THOMAS in the Chair]

Clause 5

INCOME TAX: ALTERATION OF ADDITIONAL RATES FOR 1974–75

4.32 p.m.

Mr. David Howell: I beg to move, in page 3, line 33, to leave out from 'the' to the end of line 39 and insert
'addition after paragraph (b) of the following provision, that is to say—'.
With it may I discuss the linking amendment, No. 8, in page 4, line 2, leave out '10' and insert '15'.

The Chairman: If that is for the convenience of the Committee.

Mr. Howell: The story behind these amendments will be very familiar to some Members of the Committee, but for those who may not have followed all its aspects, it is worth while going over some of the story again—and a very shoddy story it is. I should like to take the Committee back to the night of 16th July when an amendment moved by, I believe, the hon. Member for Cornwall, North (Mr. Pardoe) was carried after a rather desultory debate by 16 votes. That amendment rejected proposals by the then minority Government to change the threshold for the investment income surcharge from £2,000 to £1,000, or down to £1,500 for those over 65.
Although it was desultory debate, it was rather significant because it contained a chilling phrase of the Chief Secretary that he regarded the people concerned and affected by the amendment—and we are talking here for the most part of elderly people, not necessarily retired but getting on, who have saved up and are living on a savings and investment income considerably lower than the average wage in Britain today—as the "lowest priority". That brought home to some of my hon. Friends on this side

of the Committee just exactly what were the views of the Chief Secretary and his colleagues on priorities and their view of the kind of people we believe needed to be helped.
The House and Parliament at that time rejected the proposals of the Government but on 12th November, after a General Election, the Chancellor of the Exchequer came forward again and announced that he wished to reverse the matter and to go back to his original proposals of 26th March last year and that he intended to do so retrospectively. He did not, of course, say it in that way. He offered no arguments whatever.
If hon. Members will turn to the Chancellor's Budget Statement of 12th November 1974 they will see that he said
I intend to restore the proposal I made in my first Budget to bring down the starting point of the investment income surcharge from £2.000 to £1,000, or £l.500 for the over 65s. The House rejected that proposal in the summer
—the Chancellor admitted it quite frankly—
but I believe that it will now recognise that the burden of personal tax should fall that much more heavily on investment income than on income which is earned by current effort."—[Official Report, 12th November 1974; Vol. 881, c. 274.]
Whether or not one agrees with that sentiment, and I do not, that has nothing to do with what the Chancellor is proposing. It is just possible to argue that if the Government elected on 10th October 1974 wish in 1975 to attack elderly couples living on sums which are below the average weekly wage in this country they have some right to do so. I do not believe in the doctrine of the mandate but I suppose that an argument of that kind could be produced. What the Government have no right to do is to legislate into the past and overturn the clear decision of a previous Parliament on this matter. We regard this as an unpleasant piece of political horse trading which we shall oppose.
The amendments do two things. First, they restore what would have been the position on 26th March last year, and, secondly, they go a little further and propose an additional concession for retired people—the extra £500 for the £2,000 not attracting the 15 per cent. I emphasise the date of 26th March 1974 and that we are talking about income


generated from investment and savings during 1974 up to the end of the financial year 1974–75. That is money that has already been largely spent, if the spending is in an even flow. If we were dealing not with March of last year but with the position now, all of these figures would need radical adjustments.

Mrs. Elaine Kellett-Bowman: Does this not also apply to those who have been severely injured through accidents and are living on the income from their damages?

Mr. Howell: My hon. Friend is quite right. I will come to a number of such categories. Should the Government be unwise enough to continue with this shady practice and insist on their new proposal in this Bill we shall come to other amendments which will deal with specific categories covering that sort of situation.
If we were to deal with the situation now as opposed to last March we would need to make a substantial adjustment to these figures to leave people in the same position as they would have been in before 26th March because there has been a fall of at least 12 per cent. in the purchasing power of the pound. We shall no doubt be debating the question of monetary correction and indexing during our debates here and in Standing Committee. On this occasion we are simply trying to prevent a nasty piece of retrospective injustice.
I have no doubt that in the Chief Secretary's brief there will be, first of all, some familiar arguments, and maybe, if we are lucky, one or two new ones dealing with why this is very difficult for him and why he wants to stick to the Chancellor's proposals to carry through this retrospective measure. We shall be told it helps people with an investment income of more than £2,000 a year. That is not so terrible in itself and it is a flimsy excuse for hurting many thousands with less than that. It is also a direct discouragement to saving. Secondly, we may hear, and this would be a change from the repetitious arguments of last July, that it will all be all right and we should not worry because the age allowance mentioned by the Chancellor in his Budget Statement will put everything right for people paying on £3,000 a year.
4.45 p.m.
We are not concerned with 1975–76. We are talking about what has happened, about the year which began in April 1974 and is nearly over. I hope that we shall not be fobbed off or diverted by the Treasury Bench argument that it will be all right in future. We are concerned with what has hapened and what is happening now rather than any proposals the Government may have up their sleeve for the Spring Finance Bill.
A third objection which may be put is that this proposal of ours will cost money. That is so. The Treasury estimate in the summer was that it would cost about £40 million, and presumably that would need to be revised now. We have no hesitation in saying that if money has to be found for this change it should come from cuts in Government spending, cuts which the Government are presumably preparing and about which we shall hear in due course when their next emergency package comes forward.
Throughout the passage of this Bill I and my right hon. Friend will be supporting measures which encourage saving for investment. We shall be opposing measures which are hostile to saving for investment. In doing so we believe that we shall be following the Chancellor's injunction to get the nation to switch out of consumption and provide the savings which are essential to his objectives, which are to finance more investment, to consume less in relation to what we produce, and to put more aside to save and finance tomorrow's investment. The difference is that, unlike the Chancellor and the Chief Secretary, we are not content to make a speech about it and then duck down and wait for the mud to fly from the Left wing. We want to do something about it.
We deplore this measure not only for its retrospection but because it is part—and we shall see many other parts before this Bill is enacted—of the Government's war on savings. In their hearts they do not believe in the idea of private savings. They do not wish to encourage them, and whatever speeches may be made by the Chancellor or anyone else about the need to save and switch resources out of consumption it is a certain bet that every measure contained in this Bill or other Bills which the Government will present


in this sphere will continue that war on private savings.
My hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman) mentioned one of the categories of people who will be hit. We shall be referring to all these categories in due course. There are the disabled, possibly well over 1 million of whom cannot work full time. There are widows with children, and pensioners who purchased annuities with a lump sum and now find that while part of the annuity comes tax-free the other part suffers this impost. There are many other categories. One category which the Chancellor thought he was helping in some concessions he hinted at—had he been able to get his measure through last May and June—was that of divorced people with children. He said that the first £1,000 of investment income would be free of surcharge and the first £1,000 of maintenance income.
In real life, the maintenance often does not come through. Does it follow that there is to be a penalty? The answer is that under the present proposals the Government believe that there would be a penalty upon the divorced person trying to live on an investment income which may be in the region of £1,500 to £1,800. The maintenance does not come through and, therefore, they do not qualify for relief. My hon. Friends will no doubt raise many other categories and have many stories to tell of the kind of people who will be hit by this nasty little measure. It is part of the business of concessions between the Chancellor and the Left wing of the Labour Party. Obviously, the right hon. Gentleman has his problems trying to settle that account. Every one else sees this for what it is. It is a piece of political horse-trading, the victims of which are many thousands of people who do not deserve to be treated in that way.
It has been said that the only people who would escape the previous Chancellor's measures were the quick and the dead. As we shall learn from future debates and amendments, not even the dead will escape many of the provisions of this Finance Bill. The quick, if they are quick in spending, may get rid of some of their savings and avoid paying the penalties. They will thus escape some of the provisions of the Bill by doing

the exact opposite of what is needed from the national point of view, which is to increase savings rather than to increase spending.
The provision which we seek to amend back to its previous state is an attempt to legislate over a period back to when the Government were not in power. There was then a minority Government, admittedly a Labour Government, in a different situation with a different form of parliamentary support. Because this measure tries to legislate back over that period, and because it is utterly hostile to private savings, we seek to press the amendments to restore the previous position, and I commend them to the Committee.

Mr. David Mitchell: The clause applies an extra tax to anyone whose income from investments exceeds approximately £20 per week and to anyone over 65 whose income from investments exceeds approximately £30 per week. The clause is unfair, vindictive and against the national interest, and I hope that the amendment will be supported vigorously by my hon. and right hon. Friends.
The clause is unfair because a business executive with a company pension, a retired civil servant with a Civil Service pension, a retired member of the armed forces, a bank manager and others who have superannuation schemes are able to have an income which is supplementary to the State pension without incurring the investment surcharge. A person who has worked overseas and brought back a lump sum which he has invested is clobbered. Small business men who have had a small factory or workshop, market gardeners and small shopkeepers who have sold their businesses, retired and are living on income from the sale of those businesses are clobbered.
I am glad to see that the Under-Secretary of State for Industry, who is responsible for small businesses, is sitting on the Government Front Bench. I hope that he will seek to justify the clause, which is a powerful and unfair attack on the small shopkeeper and the like.
The clause applies to people who during their working lives have ploughed their savings into a business. With the


present rate of inflation, every small business has become a rapacious consumer of funds. A business which has £1,000 worth of stock on its shelves this year, with a 20 per cent. rate of inflation, will need £1,200 worth of stock on its shelves next year so as to have the same number of tins, bottles and so on. Countless small businesses have been drawing on the proprietor's savings in the form of extra working capital just to keep going. The proprietors have had no money to put aside for a pension or superannuation benefit. Many have sold their businesses. They were clobbered by capital gains tax but hoped to be able to live off what was left.
As I came into the Chamber I cast my mind back to a couple of examples. Hon. Members may remember Jimmy Jones, the milkman in Crooked Lane in the City. His place has gone now and has been replaced by a pub and a bank. Jimmy Jones and his wife both worked in the business. They had a milk round in the City in the morning and at lunch-time they had a clientele which consisted of bank clerks, shop managers, city cleaners and myself. They did the best baked jam roll that was obtainable in the City in those days. Mrs. Jones did her cooking in the kitchen at the back with sweat pouring off her from early in the morning until late at night. Jimmy Jones is retired and living on his savings now. Those two worked hard to have the capital to invest to enable them to live in reasonable comfort in old age, and are a typical example of the people who have been picked on by the Chancellor for such unfair treatment.
I think also of a shopkeeper in Basingstoke, which is an expanded town. The council compulsorily purchased the business when the shopkeeper was 62, too old to be able to start afresh, so he had to take the compensation money, which represents his savings. He, too, is clobbered.
It is unfair that the well-paid bank manager should not be clobbered when the retired small business man is clobbered. The Government should think again about this provision on grounds of fairness alone.
The clause is also vindictive. It is an unwarranted attack on those who have saved throughout their working lives.

Those people are not wealthy. Let us look at the capital sums which will give the sort of income with which we are dealing. For someone who had invested savings in Consols the Government relief would start at £6,123, or on £9,185 if the person was over 65. Under the modest amendment that person would be able to receive £12,246 on the investment before he started to pay the surcharge, and £15,307 if he was over 65.
Let us take an investment in the Commercial and Industrial Preferred Index, which is a usual investment for someone who seeks to safeguard his old age. The Government relief starts at £5,316, or £7,974 if the person is over 65. Those are minuscule amounts. The amendment would apply to investments of £10,632 or, for a retired person, £13,290. That is less than the cost of an average fourbedroomed house, and that is the point at which people are clobbered by the clause.
If we take the All-Share Index we find that the amounts are £9,000, and £13,500 for a person over 65, on which the Government seek to allow relief. On the All-Share Index the modest amendment means that someone with an investment of more than £18,000 would start to pay the surcharge or more than £22,500 if he is over 65.
To clobber a man who throughout his working life has saved such a modest sum—and his widow—is vindictive in the extreme. I urge the Committee to support the amendment and to reject the clause, which is unfair and vindictive.
Thirdly, I urge the Committee to support the amendment because it is in the national interest, and the Bill is against the national interest for one straightforward reason which everyone can understand. There are countless analyses of Britain's problems. There are as many different solutions as there are economists or working men's clubs. One thing on which they all agree is that we need more investment and more capital. More investment means more capital, and more capital means more savings. It is the only way to obtain such money unless it is borrowed abroad. But apparently the present Government prefer to borrow abroad and to run up debts for future generations rather than encourage the present generation to save, build up capital and invest it.
The Government have vindictively clobbered those who have saved in their working lives and will discourage those who want to save now and in the future. It is against the nation's interest that vindictive legislation of this kind should be allowed to go on the statute book.

[Mr. ALAN FITCH in the Chair]

5.0 p.m.

Mr. Julian Ridsdale: I am not surprised that the Labour benches are empty for this debate when we are discussing a measure which is both unfair and, to adopt the word used by my hon. Friend the Member for Basingstoke (Mr. Mitchell), "vindictive". I think the word "dogmatic" should be applied to this proposal.
I represent an area in which there are a great number of elderly people. At a time when we have seen increases in the level of rates and in the price of fuel, food, clothes and shoes, the cost of living has borne heavily upon the people at whom these proposals are aimed. They can hardly afford to eke out a meagre existence. Indeed, many pensioners affected by the proposal are not living but merely existing. Yet the Labour Government, in the name of Socialism and so-called fairness, are hitting at those people and hurting them a great deal. For this reason I am only too pleased to support the amendment.
I wish to underline what was said by my hon. Friend the Member for Guildford (Mr. Howell). We do not believe in taxing the weakest members of the community. Could anything he more unfair? We believe in encouraging saving. The present Finance Bill attacks saving, and this is a weakness which plays a great part in the crisis which faces the Government not only in terms of financial standing but in their dealings with the world at large.
I am sure that the Chief Secretary agrees that something should be done to encourage saving, yet along come the Government with this vindictive measure as an example of their thinking. This attack on saving can only lead the country to disaster. The proposal represents an attack on the weakest members of the community at a time when inflation is

rampant. I support the amendment and sincerely hope that it will be carried.

Mr. Ian Gow: I also wish to support the amendment, and I do so for four principal reasons.
First, I intensely dislike the whole principle of retrospective legislation. The Finance Act which was passed earlier in the year laid down the rates of tax which were to apply for the current financial year. Therefore, it was reasonable for Her Majesty's subjects so to plan their affairs and arrange their finances on the basis that following that legislation they knew what their tax liabilities were to be. That principle has been flagrantly violated by the present Finance Bill, and it is an evil that will be removed if the Committee accepts this amendment.
The tendency to retrospective legislation is apparent not only in this Finance Bill in respect of the rate of investment surcharge but also in the procedure that followed on capital transfer tax. That tax was made retrospective to 26th March and the proposals were not published until the present Session.
My second reason for supporting the amendment is that of all categories of people who have suffered most as a result of inflation it is the person with a small savings income. Since he is a retired person and in a different category from others, it is impossible for him by his own efforts to do anything to increase his income—for, by definition, retired people have already carried out their working life. Furthermore, the category of person which we are now considering has already suffered grievously as the result of the collapse on the Stock Exchange. Therefore the very people who are among the most worthy citizens and who have given a lifetime of work are now penalised since they are hardest hit by inflation, and unless the amendment is passed they will be hit even harder.
The right hon. Gentleman the Chancellor of the Exchequer seems to have a guilt complex on this subject since on 12th November he said that the House would recognise
… that the burden of personal taxation should fall that much more heavily on investment income than on income which is earned by current effort."—[Official Report. 12th November 1974; Vol. 881, c. 274]


The phrase "current effort" implied that he recognised that the income to which we are now applying our minds is, in almost every case, the result of past effort, and it is a grievous mistake for the Government to penalise savings.
The third reason for supporting the amendment is that the present Parliament has a special duty to protect the most vulnerable at times of inflation. We shall fail to discharge that duty unless we agree to the amendment.
Finally, if the figures of £1,000 and £1,500 for those over 65 were right when the Chancellor introduced his Budget on 26th March, surely they now need to be revised upwards significantly by about 12 per cent. to take account of inflation. If the Government thought those figures to be right in March, they are obviously wrong today. For these reasons I hope that we shall press this amendment to a Division.

Mr. Giles Shaw: I, too, wish to lay special emphasis on the plight of the elderly retired. The assumption behind any attempt to introduce a surcharge, particularly a tax surcharge, is that it should be primarily on large incomes. At the moment we are discussing incomes from investment. In many cases there will be large incomes from investment, and, in addition, incomes from other sources to sustain the standard of living of those who enjoy an investment income. But, by definition, a tax surcharge is an additional impost to cover exceptional earnings.
This fact to some extent is grudgingly acknowledged by the fact that in the clause some extremely modest and inadequate relief is given to those of retirement age. Yet the vast majority of those who are of retirement age and above, or those who will be affected by the clause, will be beneficiaries of pension schemes—some no doubt "top hat" pension schemes—and many may receive income from other sources. The elderly retired who are caught by this surcharge, whose total income is made up of investments which they have gathered during their working lives plus the State pension, are most unfairly hit by this impost. Therefore, I fully subscribe to the view so splendidly expressed by my hon. Friends the Members for Basingstoke (Mr. Mitchell) and Eastbourne (Mr. Gow).
There is a particular group of persons in my constituency to whom this measure applies fully. The spokesman for that group is now approaching his eightieth year. He built up his investments through saving for retirement when there was no available pension scheme during his employment. There are many retired shopkeepers, retailers and small business men in my constituency. All of them, as has been demonstrated, relied exclusively upon the sales of their businesses and the savings that they accrued during their working lives to live modestly in retirement. The relief of £500 for this group is nothing short of malicious. One of my pensioner constituents has advised me that the proposals in the Budget would leave him with a take-home nay of only 71p for two persons out of the £2·50 increase in the pension which is to come into effect in April.
I ask the Chief Secretary to consider, if possible, absolving from this surcharge those of retirement age who have no income whatever from any other source. I expect that he will argue that such a proposal will be far too costly. But this modest amendment to raise the surcharge start-line rate would be some small contribution. Surely the Chief Secretary must agree that a surcharge on the elderly retired is unjust and unrealistic, revising, as it does, their tax rate to about 48 per cent.
We on this side of the Committee make a special plea for this group of persons which has been most hard hit by inflation. The very least that we might do for this specific group is to agree some form of indexation to protect them from inflation. But, more important than that, we plead for those who have given a lifetime of service to the community and, as they approach their declining years, seek some respite on the earnings that they have accumulated. It is for savings and to be realistic and human that we wish to press the amendment.

Mr. Douglas Crawford: I do not intend to pull the heartstrings of the Committee as other hon. Members have done. However, I should like to endorse the amendment proposed by the hon. Member for Guildford (Mr. Howell) and to point out something which may not have occurred to him—namely, that the Bill, as it stands,


is a positive discrimination against Scotland because we save more per head than the rest of the United Kingdom. If and when the amendment is passed, some of the discrimination against Scotland will be removed. I hope that the Treasury will take note of that point.

Dr. Reginald Bennett: I endorse what my hon. Friends and the representative of the independence of the North have said about this matter. It is not necessary for me to add epithets and other expressions. I agree in principle with all that has been said. However, I should like to ask the Chief Secretary how much will be taken from these defenceless people by this measure.

5.15 p.m.

Mr. Tom King: I intervene to reinforce the comment made by my hon. Friend the Member for Eastbourne (Mr. Gow) that inflation has already diminished the real value of the levels at which the surcharge will apply. The knowledge of many hon. Members is that when levels are fixed they remain.
No inflation adjustment is built into any of these proposals. Indeed, what was considered to be a fair level a year or two years before, since this policy has become a political football, is palpably becoming extremely unfair. If inflation continues at its present rate, within another year or two years it will be a positive outrage in the knowledge that successive Governments have refused to adjust the allowances to take account of inflation.
I recently visited a factory in my constituency. One of the foremen told me about a man who had been regarded as a bit of a freak in his time because he had never indulged himself very much but had been proud that he had saved and not spent his money on the pleasures of this life. That man had continually said to his colleagues "You are all mugs. You will regret it when you retire." That chap has now been retired for five years. The foreman to whom I spoke met him quite recently. They had a conversation, during which this retired man said "Do you remeber what I used to tell you when I was working? I should like to tell you now that I was a real mug. I should have been far better off had I spent my money as fast as I could."
I agree with my hon. Friend the Member for Guildford (Mr. Howell) that destroying the interest in and the concept of saving is bitterly damaging the whole fabric of our society. The Chief Secretary no doubt has a brief ready to play ping-pong with our arguments in an attempt to keep the Government's end up. No concessions have been made so far. I hope that he will take to heart what I have said. This is a bitterly tragic and distressing situation. I believe that the concessions and the levels that we are fixing, even if they remain at the levels that we are now proposing for more than a year, will, at the present rate of inflation, still be too low. I hope that the Chief Secretary will not play parliamentary football with this matter, but will take to heart the arguments that have been put forward.

Mr. John MacGregor: I do not wish to repeat the arguments which have already been advanced, with which I most strongly agree. However, I want to bring out certain points because this proposal, about which I feel most strongly, has caused immense bitterness amongst many people to whom I have spoken.
The first point that I want to emphasise, which has already been stressed but cannot be repeated enough, is that the people concerned have only modest means. I refer particularly to the over-65s, though many of my arguments apply to other groups.
The hon. Member for Perth and East Perthshire (Mr. Crawford) need not be so partisan. Speaking as a Scot but representing an English constituency in which there are many Scots, I assure the hon. Gentleman that the savings habit has spread well south of the border for a very long time.
The people about whom I am concerned have savings of between £15,000 and £30,000. We have heard how easy it is for someone to come into that category. It is not difficult for a person to accumulate £15,000 during a lifetime. Often shopkeepers and the self-employed have no means of accumulating savings other than through the sale of their businesses when they retire at 60 or 65 years of age. These people have been unfairly hit in many ways in this last year, and this is the final blow.
I repeat, it is easy to get in to this category on retirement. A man may sell his house in a prosperous part of the country to retire to an area like Norfolk where, at least until two years ago, he could buy a new house fairly cheaply. He may have had life policies which matured when he reached 60 or 65 years of age, he may have commited part of his pension, or he may have built up his ordinary savings. The resulting sum comes exactly into the category on which this excessive tax would have to be paid.
If these people have equities, they have seen their capital value collapse. If they have put money into fixed interest stocks, they have seen them drop 20 per cent. in value. With perhaps 20 years of life ahead of them, they wonder how their savings will last. They now face a tax of 43 per cent. on the first slice of their income over £1,500 and 48 per cent. after that. Even without this tax their net income does not keep up with inflation levels, and the tax will make the position worse.
These people are bitter because they feel themselves particularly ignored by the social contract. They face heavier increases in their spending than groups who are not retired. They have retired to rural areas where they face long journeys for shops and other services. The petrol increases have hit them particularly severely. They are bitter towards wage-earners, many of whom have received three increases ranging from 30 per cent. to 50 per cent. over the past year. They feel bitter about the young, particularly the unmarried, many of whom, with few commitments to families and others, have also received substantial increases and have, therefore, achieved an enormous increase in their discretionary spending power in the past year. They feel bitter about the con trick which has been played on their lifetime habit of saving towards their retirement.
We should also consider the effect on their children who, having seen what has happened to their parents, wonder whether it is worth saving. Finally, there is the effect on the economy. When the Government should be encouraging savings and investment, this policy, among others, will achieve exactly the reverse.
But the problem goes much deeper. This is the inconsistency in the Bill. In Clause 6 the Government are trying to

encourage additional investment in the building societies, but this provision is crippling many of the most likely contributors to the building societies. It also affects people's desire to invest in life and insurance policies. Instead of helping the present problems of the insurance industry, this proposal makes things worse. The effect on savings in industry has already been mentioned. This provision goes directly contrary to what we should be trying to achieve in economic policy. It encourages a philosophy of spend, spend, spend. I cannot believe that that makes sense.
There are two other arguments against this proposal. In the debates on this Finance Bill, as on the last, we shall hear a great deal about indexation, and I should welcome a prolonged discussion. If we were to index the allowances in this area, we should be talking in the main about £2,400 not £2,000, as the limit at which the higher rate applies. The amendment will at least achieve that purpose for the over 65s.
What astonishes me is that the Government have elsewhere accepted the principle of special treatment for these people, as shown in the Chancellor's announcement about the new age allowance to be implemented in the next Finance Bill. So he must have recognised the validity of many of our arguments. The inconsistency of hitting that group much harder this year before giving them extra relief next year is beyond belief. For that reason, among many, I hope that the Government will have second thoughts and will yield to the amendment.

Mr. Percy Grieve: The action of the Government in seeking to set aside the amendments to the 1974 Finance Act and to reduce to a limit of £1,000 the concession for aged people living on investment incomes will demonstrate what the middle classes now believe—that the Government are waging deliberate war upon them. In March last year I put down a series of Questions to the Chancellor of the Exchequer asking what income would be necessary today to produce after tax the equivalent of a series of incomes in 1939 from £1,000 to £10,000 a year. His answer showed that in March last year one would have needed £64,000 to achieve the equivalent of a 1939 income of £2,000. That figure shows, if anything does, that someone in


retirement with investment income of £2,000 today is far from rich.
I have sent the Treasury a number of letters from constituents about this clause. A large number of people in my constituency have sold their businesses and are living in retirement on the fruits of a lifetime of labour, many of them on incomes of £1,000 to £2,000. Today £2,000 is being earned in many sections of industry; it is not a high income.
The clause will hit people who have saved hard. The Government are deliberately seeking to discourage the virtues of thrift and industry by which alone our country will achieve economic recovery. In speech after speech, Treasury Ministers pay lip-service to the need for thrift, saving and investment in industry, but by their actions in this Bill, including many clauses to be debated later, they are discouraging those very qualities.
I warn the Government that the patience of the middle classes is nearly at an end. An article in The Times the other day headed "The Anger of the Middle Classes" expressed no more than the truth about the actions of this Government toward the middle classes.
These people have also been hit throughout by the fall in the value of stocks and shares. I made a speech in May or June of this year, when the Financial Times Index had fallen to 271, and the Financial Secretary sat on the Front Bench with a grin on his face—[An HON. MEMBER: "He is not even listening."] I dare say he is not, because Treasury Ministers are shutting their ears to the arguments about this vicious attack on saving, investment and those who save and invest. I hope that they may yet have second thoughts and concede the amendment I say "I hope" because
Hope springs eternal in the human breast.
But I very much doubt whether they will, because their real motives are to destroy the middle classes and to destroy the economy of this country.

5.30 p.m.

Mr. Patrick Mayhew: I want to support the central point made by my hon. and learned Friend the Member for Solihull (Mr. Grieve). I represent a constituency which perhaps has

an unusually high concentration of people who are now retired. They have been brought up throughout their lives to save, but they now bitterly regret ever having done anything so unworldly.
I do not want to belabour the practical or the constituency point. I want to attach it to a point of principle because, as I understand it, the philosophy behind this part of the Bill is the philosophy of social justice. Not many of us may be able to define social justice, but probably all of us would say that we were in favour of it. But social justice, just as is the case in any other form of justice, requires that there shall be justice as between one subject of the Queen and another. Those members of our community who have done the unselfish, the independent and the patriotic thing, who have done the thrifty thing, all their lives, now see themselves penalised, while at the same time they see other members of the community who have done none of these things now becoming the non-contributing beneficiaries of retirement pensions and other welfare benefits to pay for which the savers are being taxed. These people now see themselves not the beneficiaries of social justice but the victims of social injustice.
It is partly because the Bill makes no distinction between persons living upon incomes derived from inherited investments, on the one hand, and persons living upon incomes derived from saved investments, on the other, that I believe it essential that the amendment should be accepted. The other reason is the reason of principle to which I have already alluded. I believe the Bill to be fundamentally bad in this particular because it is based upon an unjust principle, and it is on the point of principle just as much as upon the particular point that I shall support the amendment.

Mr. William Clark: I agree with what my hon. and learned Friend the Member for Royal Tunbridge Wells (Mr. Mayhew) has just said. The Minister really is setting taxpayer against taxpayer in this regard. We can talk about inflation and about people drawing welfare benefits, the old-age pension, and so on, but in this regard what we must examine is the positions of, for instance, two people working for different firms.
It may be that one person is fortunate enough to work for a firm which has a superannuation scheme. That employee, during his working life, may or may not contribute to that scheme, but if he does contribute, successive Governments have given him tax relief on his contributions. When he comes to retire at the age of 65 or 60—I think that the age of 65 is a little mythical—having had his superannuation contributions allowed for tax relief during his working life, he then receives a pension and enjoys what is known as the earned income relief. In any case, he is not subjected to the investment surcharge.
In the case of his contemporary who is working for a different firm which, unfortunately does not have a pension scheme, his salary may be adjusted because of the lack of a scheme during his working life. He has not paid superannuation contributions because there was no scheme to join, and he has been paying tax on his slightly higher income during his working life. When he comes to retire, the savings he has made are then clobbered.
We are talking about £1,500 a year, but what is that as a pension? It is about £30 a week. When one considers that average industrial earnings are well over £40 a week, one appreciates that we are not talking about anything to assist the rich. It is the small man.
I regret very much that the Minister who is responsible for small businesses is not present. He was present earlier. I should have liked him to answer the debate, because the people who are being penalised are particularly those who were not sufficiently fortunate to belong to a superannuation scheme and the self-employed. The self-employed, during their working life, have had to make provision for their old age.
The Government are being a little schizophrenic in the Bill. The Chancellor says in Washington, and at any meeting of Finance Ministers anywhere, that in this country we must have investment. But what do the Government do? They clobber investment. They do not encourage it. The Government cannot have it both ways.
The Chief Secretary has great expertise in taxation matters. Fortunately, he is one Minister who understands what tax

is all about. I am sure that he will agree that taxation, to be acceptable, should be equitable. That has been the premise and philosophy of successive Governments. In the example which I gave, of two persons working for different firms, one in a superannuation scheme and the other not, it is not equity at all. This is grossly inequitable. I do not find it funny—as apparently do Ministers on the Government Front Bench. Not all of my constituents are terribly rich. They are thrifty. They have saved money during their working lives. Not all of them have belonged to firms with superannuation schemes or have additional pensions.
I ask the Minister to look again at this matter, because the clause is a vicious attack on anyone who shows a sense of independence. Whether or not a person is to have a pension from his firm, why should he not save his money during his working life and augment his old-age pension or whatever pension he may receive at the age of 65? Why should the present Government, or any Government, say "You have been thrifty all your life, but now at your retirement age we shall clobber you and tax you harder than your contemporary"? That is why I hope that my right hon. and hon. Friends will press the amendment to a Division.

Mr. Patrick Cormack: It is extraordinary that the present Government should have become the scourge of the saving classes. That is what they have become. Unless the-Chief Secretary concedes the amendment, or something very much like it, he will be guilty of gross paradox. We have a Government the Ministers of which will stand at the Dispatch Box time after time saying "We must make sure that our old people are properly catered for within the State system, and we must make sure that pensions take account of inflation and that supplementary benefits do likewise". The Government also talk of the need for helping underdeveloped countries. Yet the Government, who will do all of that, are at the same time viciously attacking those of their own citizens who, through thrift, foresight and perseverance, have over decades saved their own money for their retirement. It is a most dreadfully paradoxical situation that this sort of Government may be hitting these people.
It is also rather strange that Socialists who say that they wish to help people to advance themselves should be penalising people who have taken the precautions to make sure that they are not dependent totally upon the State when they retire.
I hope that the Chief Secretary, who is a member of the middle classes and has no doubt got savings, who is an accountant and knows how these things work, will bring his personal experience and knowledge to bear. I hope that if he has some form of distorted brief in front of him he will toss it away and talk with a degree of proper knowledge and compassion when he replies to the debate. Hon. Members on the Government side of the House are very fond of the word "compassion", but it is a sort of selective compassion. It is allowed to apply to only certain sections of society. It is absolutely fatuous that we should allow ourselves to be browbeaten by hon. Members on the Government side of the House into ourselves sometimes adopting an almost guilty stance when we defend capital and inheritance. What is wrong with somebody building up his capital and, through his saving, contributing towards the financial well-being of the country? We need those people at the moment. What is wrong with the ordinary human instinct to try to do a little better for one's children than one has been able to do for oneself and pass on something from the fruits of one's labour, to quote my hon. and learned Friend the Member for Solihull (Mr. Grieve)?
I cannot accept that the type of pernicious and vindictive principle that is enshrined within this Bill is truly British, and I hope that we shall vote against it. Of course, I trust that it will not be necessary to vote against it because I hope that this amendment will he accepted.

Mr. Dafydd Wigley: I had no intention of intervening in this debate, but now that I have decided to do so I must say that I do not agree with most of the comments which have emanated from these benches, although there are some with which I do agree. I am not sure whether I follow the hon. Member for Staffordshire, South-West (Mr. Cormack) in that great British tradition to which he referred.
I am pleased to see that the number of Members on the Labour benches has now risen to double figures, because for much of this debate there have been only five Members on those benches. It is incredible that not one spokesman on the Government benches has so far risen to defend the Government's propositions.
Having said that, I find myself probably in greater sympathy with the idea that income should be earned rather than come from investment than are most Members on this side of the Committee, but I ask the Government in all seriousness whether this is the right time to take the measures which they contemplate. People who have saved in order to provide for their retirement, because there were no superannuation schemes available, now find that the value of their savings has been decimated, and some of them may be facing a marginal tax rate of as great as 48 per cent. These people are earning less than £2,000 a year—£40 a week—at a time when the average male industrial worker over 21 is earning about £55 a week, and one must ask whether this is equitable. From the point of view of the timing of these proposals and of fair play to people who have been put into this position, the Government should look again at these proposals.
I wish to refer to another aspect—that of capital formation. Everybody seems to be agreed that capital formation is an essential part of the remedy to our economic situation. But there is a real danger, not only in this Bill but because of other things which have happened to the economy in recent months, that those who might be induced to invest money and save may be scared away. If this happens and the fires in this direction are stoked by such moves, I wonder whether the Government have any alternative for increasing the level of capital formation in the economy. I have not heard any positive proposals in that direction. The references to increased levels of savings in building societies do not go far enough to meet this point.
Finally, may I ask the Chief Secretary to say how much money, at the latest estimates, the Government expect to get from the change proposed in this clause? I think the answer would be very revealing.

Dr. Alan Glyn: The Chief Secretary will agree with one thing, and that is that this country's economy has been to a large extent built up on the small saver and small entrepreneur. If we are to encourage people of that sort, the type of legislation which it is proposed to put through today will have exactly the reverse effect. What is the good of saying to people "We will encourage you to invest in building societies" when at the same time exactly the reverse is being done by this Bill?
5.45 p.m.
Is there any real difference between the man who all his life contributes towards a pension scheme and the man who has no alternative, because he is self-employed and has his own business, but to save and invest and then at the end of his life to live on that investment? I cannot see the difference.
Coming to my third point, which the hon. Member for Caernarvon (Mr. Wigley) brought out very well, is this the time to penalise savings when we have an extremely high inflation rate and when we ought to be encouraging people to save? This sort of measure is wrong, and in any case it is certainly introduced at the wrong time.

Mr. Nigel Lawson: I, too, had not intended to speak in this debate but I have been very much struck by the eloquence and cogency of the remarks of my hon. Friends who have made various cases for this amendment, and by the equal eloquence of the total silence from the benches opposite. I agree that certain sedentary noises occur on the benches opposite from time to time, but I would not grace them with the description of eloquence.
My first complaint is that this proposal is all of a piece. Everything in this Bill and, indeed, pretty well everything the present Government have been doing, when one thinks of the surcharge—the special tax—on the self-employed, is part and parcel of an attack on independence, self-reliance and individual self-respect. It is an attempt to create a spendthrift society totally dependent on the State and on those who hold temporarily the levers of power in the name of the State. It is also in this context an attack on small savers.
Before going on to the smallness of the savings which are involved, I ask the Chief Secretary to answer a question which puzzles many of my constituents. They want to know why they should pay a surcharge on investment income at all, when they have worked very hard for the savings which they have accumulated. We are talking about very small sums of money. My hon. Friend the Member for Basingstoke (Mr. Mitchell) said that at the current rate of inflation, on undated securities—many people have Consols and War Loan—to be the recipient of the savage increase introduced in this Finance Bill, the saver will have to have saved up no more than £6,000. That is not a large sum. It is nothing like the £20,000 aired by the Chief Secretary and I think also by the Financial Secretary when we debated this matter less than 12 months ago, when the Government then tried to introduce this proposal. Even that yield would not compensate for the rate of inflation.
I do not know whether the small savers are meant to be part of the social contract but one assumes that they are because we are told from time to time that everybody is. The trade unions regard as part of the social contract the necessity for their members' incomes to keep level with the rate of inflation. The small saver's income cannot possibly keep pace with the rate of inflation. But at least he may hope that the value of his small capital will keep pace with the rate of inflation. To do that he will need to have a yield of 21 or 22 per cent. which would mean that we are talking about a capital of only £4,000 being affected by this proposal. Indeed, the capital would be much smaller if one took into account the rate of taxation, because the yield needed to cover both the rate of inflation and the rate of taxation is so high that it does not bear thinking about.
There is a more important social contract than the mythical social contract which the Government talk about, and that is the contract to keep faith with the people over the value of money and the value of people's savings. That is a difficult thing to do. Inflation is a problem which is puzzling and baffling many countries. But to make the situation infinitely worse, in particular for those most vulnerable, is unforgivable and the


grossest breach imaginable of the social contract.
I wish to reiterate one point made by my hon. Friend the Member for Eastbourne (Mr. Gow). This is true retrospective legislation, but we have come to expect that from the Government. It was contained in their last Finance Bill on several occasions, and no doubt on examination the same will be seen to be the case in this Bill. It certainly applies on the point we are discussing. It would have been fair enough constitutionally if the Government had said "We fought the election on the basis of clobbering savings, the small saver, the self-reliant and independent, and on the basis of destroying the middle classes. Having got our mandate to do that, we will introduce new taxes to give effect to our plans." But what we have here is far worse. This provision is being introduced five-sixths of the way through the fiscal year and will apply retrospectively. By the time the Bill gets the Royal Assent the retrospection will be that much more acute. There must be serious doubt whether the Bill will receive the Royal Assent in due time—

Mr. Cormack: There may be another Budget.

Mr. Lawson: My hon. Friend may indeed be correct. We are already having great difficulties with the continuous performance of one Finance Bill coming along before another has been enshrined on the statute book.
This subject, along with many other aspects of the Bill, raises the question of indexation. The Opposition have tabled the amendment in an attempt to improve the past situation and to take account of the fall in the value of money, which is a sort of rough and ready indexation. We must, however, look seriously at the whole question of indexation. I hope that we shall look at it more wisely and more responsibly than the Chief Secretary did when the matter came up for discussion during proceedings on a previous Finance Bill when he was tackled on the subject of indexation, tax brackets, tax reliefs and so on. As time passes, smaller and smaller savers are being caught. The trouble occurs lower and lower down the scale. Because certain indirect taxes are not of an

ad valorem nature, there is a huge shift of the burden from indirect to direct taxation without any parliamentary sanction or control in the public interest.
When indexation was raised on that occasion, the Chief Secretary said
Certainly there will be high levels of inflation, but not in the long distant future, which would be necessary if one were thinking in terms of indexation on a permanent scale—which I am not.
We are grateful to the hon. Member for his assurance about the long-distant future, but Keynes said that in the long-distant future we should be dead. If something is not done for the long-distant future, there will be a much more serious economic crisis and catastrophe than even the present Government have been able to devise. It is, therefore, not good enough for the Chief Secretary to say—and I am sure he has no crystal ball to help him—that there will be no inflation in the long-distant future and in that way justify his rejection of indexation. The right hon. Gentleman went on to say
But it would be very difficult if large parts of what a Chancellor had to do was taken out of his hands and matters were much more inflexible in that there was this indexation which decided in advance what the levels of tax would be for whole groups of people."—[Official Report, 6th May 1974; Vol. 874, c. 1632–3.]
I would have thought that it was elementary justice that the levels of tax whole groups of people should pay should be decided in advance. It is manifestly unjust that people do not know what the effective rate of tax will be on their earnings, and they cannot since no one knows what the rate of inflation will be from one month to the next. This creates total uncertainty. If the Chancellor thinks that this will help him to plan his economy, not that we have seen much sign that it has helped him to succeed so far in dealing with the country's problems, he is thinking manifest nonsense, unless he knows for sure what the rate of inflation will be. He told us before that it was 8·4 per cent., but that did not turn out to be accurate, and I doubt whether he would like to hazard a confident forecast on the rate of inflation over the next 12 months.
Under the present system the Chancellor does not know what the tax yields will be, but he would have a better knowledge of the effect of his measures if


there was indexation. The truth is that he has a vested interest in getting additional revenue by the back door and in occasionally handing out phoney cuts—they are phoney because they only restore the statusquo—from time to time to certain groups of people. The amendment seeks to provide for one group, the small saver with an investment income of £1,000 or £2,000, no more than justice and no less than justice. Of course, some people who are better off might benefit, but it is a poor philosophy to say, that because that might happen the small savers who are totally deserving should not be allowed to benefit at all.

Mr. Norman Lamont (Kingston-upon-Thames): One of the most remarkable things that was said by the Chief Secretary in the speech from which my hon. Friend has quoted was that he was not happy about the present distribution of income. He implied that he was looking to inflation to redistribute income and that he preferred that it should be done by inflation rather than by Parliament.

Mr. Lawson: My hon. Friend the Member for Kingston-upon-Thames (Mr. Lamont) is absolutely right. I am afraid that the truth is that some of the Labour Members—I hope not all of them but certainly the Chief Secretary—relish inflation. We believe that there are people who must be helped, and that is the aim of the amendment. That is why I hope that it will be accepted by the Government, or, if it is not accepted by the Government, that it will be carried by the House.
But it may be said that this will cost £40 million, and people may ask "How will you find that?" We have no difficulty. First, I trust that later this evening we shall eliminate the £10 hand-out to trades unions which unnecessarily subjected their members' funds to the levy of that amount. That would leave £30 million—

Mr. Cormack: Food subsidies can be cut.

Mr. Lawson: As my hon. Friend says, a modest cut in food subsidies would enable justice to be achieved.
I hope that the Chief Secretary will accept the amendment. If he does not, I hope that the Committee will pass it.

6.0 p.m.

Mr. Peter Rees: First, I must apologise to the Committee for not having heard the whole debate. I gather, however that no case—not even an ineffective case from a sitting position by the hon. Member for Feltham and Heston (Mr. Kerr) who is now leaving the Chamber—has been put either for the clause or against the amendment.
With the clause the Labour Party is pursuing its paranoiac obsession with what it would choose to call capital and investment income, and what I would call savings and savings income. So be it, but let the country recognise the quality of government we have at this crisis in our nation's affairs.
Most classes of our community have been hit by inflation. The Chancellor of the Exchequer has told us that we must all accept a diminution in our living standards. Whether the more powerful sections of organised labour have accepted that remains to be seen. But at least those of our community who are still in gainful occupations have the possibility of cushioning themselves to a degree against this shock and have the possibility of climbing back to their present position after we have passed through the crisis.
However, there is one class which will be affected by the clause and which may be cushioned, to a degree, by the amendment. I refer to those who have retired with a small sum saved with which they have calculated they can spend a dignified and comfortable old age. Many of them were, perhaps, in occupations in which there was no pension provision, or inadequate provision. The company pension is a comparatively recent phenomenon, unfortunately. The self-employed were unable to obtain any tax relief for sums put aside for pensions before 1956. They will be hit particularly by the mean-spirited measure embodied in the clause.
It seems to me, as it must seem to many of my right hon. and hon. Friends, that the self-employed in particular have been singled out as sacrificial lambs to appease organised labour and the extreme Left wing. They are people whom I and my right hon. and hon. Friends meet in our constituencies—

Mr. Cormack: We are proud to represent them.

Mr. Rees: Indeed, because they are people who have given their best, sometimes in public positions after a lifetime in their own occupations and businesses. We are entitled to ask the Government to have some regard for them and to recall that they have made their calculations for retirement. They may have a modest car and a modest house. They have budgeted for a modest standard of living. The incomes of people likely to be affected by the clause are not enormous by present standards. In weekly terms, though the Government always prefer to translate these figures into annual terms, their incomes may not be more than £40-£60 a week gross. I challenge the Chief Secretary to say whether he regards that as excessive.
They have faced a diminution not only in their capital but in their standard of living. They have probably seen their capital not halved but quartered. They have seen their standard of living cut by the increases in the price of petrol. Many of them depend on their cars, particularly if they live in the country districts in my constituency, where there may be no bus service to take them to do their shopping in Deal, Dover or Canterbury.

Mr. David Mitchell: Does my hon. and learned Friend realise that in spite of the importance of the subject to the widows, the elderly, the retired and small business men, not a single Member is present on the Government back benches? It is disgraceful.

Mr. Rees: I am grateful to my hon. Friend for re-emphasing the point I made at the start of my speech. The country may recognise that that shows the depth of concern on the Government benches for the people whose interests we have at heart and which we are trying to ventilate in the debate.
I am not often sorry for the Chief Secretary, but I am sorry for him on this occasion, because on his narrow shoulders he carries a great burden. He has to make a strong case. He alone must carry in this debate the burden of defending what I have described, and will continue to describe, as a very mean clause, and for rejecting a modest measure

of relief. I hope that this fact will be noted outside the House.
The class about which we are particularly concerned face a considerable diminution in their capital and standard of living because of petrol costs, their rates and the cost of their food, coal and fuel oil. Those of us who—dare we say it?—are in the prime of life may live through this crisis. We may climb back to the position we were in before March 1974. We may be able to resume the march of progress, to catch up with our former expectations. But the people of whom I am speaking will not be able to do that. We must be particularly tender of their interests.
I have not seen a glimmer of understanding or sympathy from the Government benches, but I hope that the Chief Secretary, who I believe has listened to the debate, even though he has been carrying on an intermittent conversation with his hon. Friends on either side of him—he may be looking to them for a little moral support that he is not receiving from behind him—will rise above the obsession of his party and acknowledge that the amendment provides a small but distinct measure of justice to a hardly-used group of our community.

Mr. John Loveridge: Some of us sympathise with the Minister, because he has to raise so much money to pay for the Government's programmes. We know that under a Labour Government taxes always have to rise.
The clause seems to be particularly mean, because it singles out for the imposition of additional tax older people who have saved during their lifetime. Many people who have run, for example, a small grocery business and have sold it for £6,000 or £8,000 to live on the investment will find that their lifetime's savings are so heavily taxed that they will be little better off than their neighbours who have been improvident and have not saved. Their hardships will have been worth nothing.
In my constituency there is a group or old people's flatlets where there is strong resentment between some of the old people and their neighbours. Those who have small savings say "We lose our social security benefits. We are hardly any better off than our next-door neighbour. Why should we have done without


all our lives, why should we have worked so hard? We advise our children"—this is what has been said to me—"to take the easy course—namely, not to study, not to work hard and not to save. We tell them that there is little benefit in it when you become old."

Sir John Hall: Does my hon. Friend agree that the Chancellor has added great weight to that advice by saying that he never saves and that if he has any money he always spends it?

Mr. Loveridge: Yes, the Chancellor's comment adds great weight to the point that I was trying to make.
I hope that the Chief Secretary will reconsider this matter. He must know of elderly people who are in the position that we have described. He must have them in his constituency. They must come to him and attend his advice bureaux. They are people who deserve consideration. The small relief that is offered depends upon the age at which one happens to have chosen to acquire a wife. That is rather a peculiar incidence to choose and scarcely offers much relief in any case. Let the Chief Secretary take this matter back. Let him think about it again. We ask for some concession for the old who have saved. They need encouragement, but, above all, the next generation needs encouragement to work hard.

The Chief Secretary to the Treasury (Mr. Joel Barnett): I have listened to the whole of the debate and I have found it interesting. I have been described as mean, savage—

Mr. Kenneth Lewis: There are not many of the Minister's Friends sitting behind him, anyway.

Mr. Barnett: I cannot blame them for that. I have been described as mean, savage, inhuman, vindictive, evil, vicious, schizophrenic and un-British. I hardly recognise myself. [HON. MEMBERS: "We do."] I am delighted to hear that.

Sir John Hall: rose—

Mr. Barnett: Not now. I shall give way later. The amendments that we are discussing seek to reverse what we are seeking to do in the clause, namely, to bring back the threshold for investment

income from £2,000 to £1,000. The second amendment seeks to add another £500 for those over 65 years. I was asked for the cost in a full year. The implementation of the two amendments would extinguish a yield of £40 million and turn it into a loss, in a full year, of £53 million.
Perhaps I should say a little about the background, as did the hon. Member for Guildford (Mr. Howell). The background goes back to the time of unification in 1973–74 when we thought that the then Conservative Chancellor had been far too generous in the relief that he gave to those with investment income. We are now seeking not to remove anywhere near the whole of the reliefs that were then given. For a true comparison we must consider not only the effect of the clause in 1974–75 compared with 1973–74, but the comparison with pre-unification figures before the enormous amount of relief was given by the then Chancellor.
If we take that comparison a single person with an income of £5,000 wholly from investments paid £500 less tax for 1973–74 than for 1972–73. Under the combined effect of the spring Budget and the current proposal such a person's liability will increase by £222, still leaving him with a gain of £278 compared with 1972–73.
There are many more examples of that kind. The comparison is the clear one between what the situation was before such substantial relief was given to those often with substantial investment income and what we are now seeking to do.

Mr. Lawson: Will the Chief Secretary concede that if this hypothetical individual had a constant income—namely, the same income now as in 1972–73—the drop in the real value would be considerably greater than the gain which the right hon. Gentleman is alleging has occurred?

6.15 p.m.

Mr. Barnett: I was going to come to the question of the drop in real income. I now turn to a number of points that have been made on a number of occasions by a variety of Conservative Members in a variety of ways.

Mr. David Howell: rose—

Mr. Barnett: I have not come to them yet.

Mr. Howell: The Chief Secretary spoke of the background to this issue. He is now slipping with agility over the propriety of the Government's overturning retrospectively the clear decision of a previous Government. This is a most unusual departure, to put it at its lowest, and we deserve some comment on it before the right hon. Gentleman goes on to other matters.

Mr. Barnett: I have listened to every Conservative Member who has spoken and I have just started my reply. I had every intention of referring to the retrospective argument. I am sure that the hon. Gentleman would not imagine—but apparently he did—that I would not comment on that issue. I had no intention of not replying to every point in the debate.
Much has been made about what we are doing in the clause that we are discussing. It is said that we are taxing savings income. It seems that it is only savings income that we are taxing. Perhaps some Conservative Members will accept that not all of it will be savings income. There is just a possibility that some of it will be investment income from other sources. I leave it at that. I take it no further.
Another point that has been made frequently is that it is wrong to have an investment income surcharge. That was a point that was made by a number of Conservative Members. I must point out to them that the last Conservative Government, when introducing unification, did not take that view. As far as I know it is not now the view of the Conservative Front Bench. If it is, I shall be interested to hear that there has been a change of mind.
The amendments seek to change the investment income surcharge as between the £1,000 threshold and the £2,000 threshold. That is what we are talking about. We have reduced the 15 per cent. to 10 per cent. That is a maximum of £100 per person. We are not talking about an investment income surcharge. That is not the issue. I hope that we shall not hear anything about clobbering all savings incomes.
I now turn to the effect of the main part of the amendment. The first £1,000 of investment income will obtain relief that was not available before unification.

That was when a higher rate than the earned income rate was payable. It has been said that it represents a saving of about £6,000. Of course, it could be £6,000 if it were invested in a certain way. If it were invested in another way it could be less than that or substantially more. Much depends upon the manner of investment. If the investment were in equities of a certain type the amount could be considerably larger. I am sure that that is appreciated. It is £6,000 or more.

Mr. Lawson: Or less.

Mr. Barnett: I am not arguing about the size of the figure. There need not be any investment. The money might be put underneath a person's bed. Perhaps that is where the hon. Member for Blaby (Mr. Lawson) would prefer to put his money. I know that it is difficult for Conservative Members to understand that even £6,000 is a lot of money to the majority of ordinary working people. It is a lot of money. Many working people would love to be able to save £6,000. The hon. Gentleman should ask that question of postmen, railwaymen and the vast array of working people. It gives us an idea of the way the Opposition think, if they find it hard to understand that a working man today is unable to save £6,000 after a lifetime.
Under the amendment we are talking not only about a man who has saved £6,000 throughout his lifetime but about a man with investment income who has only just started to work, or who may never have worked. We are not talking only about men aged 65 and over. Indeed, that is not the purport of the main amendment.

Mr. David Mitchell: Is the Minister aware, when he refers to the enormous sums saved as being outside the scope and ability of ordinary working men to save, that it represents no more than the saving of £2·50 a week. If that is not what he condemns as being outside the scope of the ordinary working man, he is not in the realm of reality.

Mr. Barnett: I was not condemning saving. I think it is marvellous. However, how is a man earning £25 a week, who has a wife and two children to support, to have the chance of saving £2·50 a week? Opposition Members must listen.


I listened to every speech made by them. They should do me the courtesy of listening to what I say.
I said that many working people will not be able to save £6,000 by the end of their life. However, we are not talking about the end of their life—we are talking about possibly the beginning of their working life, or even before it starts. Let us be clear what we are talking about.
Given the priorities before us, a concession, in post-unification terms, of £1,000 of investment income being taxed as earned income, is not an unreasonable figure. However, we have recognised a higher figure for those who have saved money throughout their working lives, because we have specified a higher figure for people over the age of 65. The figure of £1,500 is 50 per cent. higher than the figure of £1,000. With that, and with the other relief we have given to the elderly with earned incomes of up to £3,000 a year, we have helped them very substantially. I think that is the way to go about it.
The Opposition made a lot of the question of inflation. I make it clear that inflation and what has happened on the Stock Exchange have harmed many people. Of course one understands that.
In deciding whether we should give £53 million of tax relief to a certain group of people, we have to say whether they should be given the concession because of the inflation which has occurred over the past nine months. We are arguing whether that group should be singled out to be protected against inflation.

Mr. Grieve: The right hon. Gentleman used the expression which one always finds on the lips of Treasury Ministers—"Why should we give something?" We do not ask them to give anything, but to refrain from taking away.

Mr. Barnett: I shall be coming to that. The hon. and learned Gentleman will be happy to know that whether we are giving it or taking it away it will certainly reduce the amount of money available to the Exchequer.

Mr. Peter Rost: A good thing, too.

Mr. Barnett: I shall be coming to that as well. The argument about retrospection was raised by a number of hon.

Gentlemen, starting with the hon. Member for Guildford. Let me make it clear that this is a new Parliament. There is nothing unusual in introducing a tax, during the tax year, in a new Parliament.
The fact that the proposal was defeated in the previous Parliament—because the composition of the House was such that it did not carry sensible legislation introduced by the then Government—is not my fault. I am now concerned with the legislation that we are introducing in this Parliament. It is no use saying that this is retrospective, that it is a terrible thing—as if it has never happened before—and that there are no precedents. There are many precedents.

Mr. Lawson: Quote some.

Mr. Barnett: I shall do that, with pleasure. In December 1973 the Conservative Government announced a surcharge which the Labour Government took over eventually in the Spring Budget of 1974 from the then Government, who would have introduced it. It was announced in December 1973 and introduced in the Spring Budget of 1974. That was retrospective legislation, to which, I hasten to add, I did not object.

Mr. Lawson: I thought that the Chief Secretary would quote that example. There is an important difference. That proposal did not reach back to the period of the previous Parliament, whereas this one does. That was also a one-year-only measure. If the Chief Secretary is drawing a parallel, will he assure us that what he is proposing to do in this clause is in fact for one year only?

Mr. Barnett: I might be prepared to give assurances, but not to the hon. Gentleman, and certainly not on that subject. The proposal will have retrospective effect. In a Written Answer in July, during the last Parliament, I said this would be done.
I now turn to those who will be the beneficiaries of the £53 million. The hon. Member for Caernarvon (Mr. Wigley), who raised the matter, said that he spoke with an open mind, although it was not clear at the end of his speech that that was the state of his mind. I know his views on these matters. As regards the beneficiaries, we have had many descriptions of the type of people who would benefit from the £53 million


—the modest savers, the elderly, the small business men, men of modest means, and those kinds of people.
First, let me deal with the £40 million which is the basis of the main amendment. Seventy-five per cent. of the £40 million, amounting to £30 million, will go to those with incomes of over £3,000 a year before tax. Before any hon. Member jumps up to tell me that that is not an enormous figure, let me say that I entirely agree with him. Of course it is not enormous. I am pointing only to the beneficiaries who will receive far and away the greater part of the £40 million. Indeed, £17 million of that sum will go to those with incomes of over £5,000 a year. Those are the kinds of priorities that hon. Gentlemen seem to prefer in their amendments. I must tell them that that is not my priority and I doubt whether it is the priority of many of my hon. Friends.
Many of the people with such amounts of investment income, and who would benefit from this relief, are not wealthy. They are hard-working people. Many of them resemble the kind of person spoken about by the hon. Member for Basingstoke (Mr. Mitchell)—small business men who have worked hard throughout their working lives in small shops, and so on. I do not dispute that. That is the case. However, given the economic climate, the Committee must consider whether this is the way in which the priorities should work and the way we should seek to spend £40 million. That is the issue before us—not whether all these people are worthy. Of course many of them are worthy. I do not dispute that. However, that is not the issue.

Mr. Mayhew: The hon. Gentleman says that this is how we should spend £40 million. That is a misleading way of putting it. The question is not whether we should spend £40 million but whether we propose to take £40 million away from those people. It is in that context that we have to look at the circumstances in which those people have amassed the capital producing the investment.

[Sir MYER GALPERN in the Chair]

6.30 p.m.

Mr. Barnett: I grant the hon. and learned Gentleman that we could really give back the whole of our tax receipts if we wanted to. It is taxpayers' money, after all. However, that argument is not worthy of the hon. and learned Gentleman.
One or two hon. Members touched upon the financial and economic situation and expressed their alarm at the size of our public sector borrowing requirement and the size of our deficit. However, these two amendments would add to the borrowing requirement to the tune of £53 million.
I come directly to how they would offset that sum. We are told that the way to offset the £53 million is to cut public expenditure. I can understand that, and I could accept it from many people. But it is a suggestion which comes strangely from the Opposition.
On agriculture, for example, the Opposition would seek a considerably higher level of support. On housing, the right hon. Member for Finchley (Mrs. Thatcher) would seek to reduce the mortgage interest rate to 9½ per cent. and to introduce a home savings grant scheme at a cost of £300 million. On law and order, the Opposition have pressed for priority to be given to increasing police manpower, to improved pensions, to a big city allowance, to rewards for long service and to increased expenditure on recruitment. On education, the Conservative Party manifesto said that the party wanted to make all student grants mandatory, at a cost of £200 million, and to reduce parental contributions, costing £30 million. Those aims are all very fine, but they are not exactly ways of cutting public expenditure. As for social security, nothing could be more dishonest than what is happening at present upstairs in Committee, where the Opposition are voting for amendments which would cost very large sums of money. They are opposed to reducing defence expenditure by £300 million in 1975–76 and by £750 million in 1978–79. However, they would offset the £53 million addition to the public sector borrowing requirement resulting from these amendments by cutting public expenditure. I


shall believe that when I hear some serious arguments. We have had none.

Mr. Lawson: What about food subsidies?

Mr. Barnett: That is very interesting. The Opposition would rather give £30 million to those with incomes of more than £3,000 a year, and they would increase the price of bread to do it. If that is the policy of the Opposition, with which the hon. Member for Caernarvon agrees, I am extremely surprised.

Mr. Ioan Evans: My right hon. Friend has given the Committee a catalogue of the additional public expenditure suggested by the Opposition. However, they also want to increase defence expenditure and to abolish the rating system by putting the cost on to the National Exchequer.

Mr. Barnett: I was trying to save a little time. I hope that my hon. Friend will forgive me if I do not mention all the items on which the Opposition wish to increase public expenditure.
It must be clear that this cannot be the way to increase the public sector borrowing requirement by £53 million. There may be other ways, but this cannot be the one, and therefore I ask my right hon. and hon. Friends—

Mr. Wigley: Those of us who advocate not hitting people who are dependent on investment income and who are in the lower scales, albeit that they will only get a fraction of the money proposed to be spent on these amendments, would not suggest that it be taken from food subsidies. We would propose cutting defence expenditure even further. But, in any event does the right hon. Gentleman believe that this package in total will help increase or decrease capital formation in the economy?

Mr. Barnett: I was about to conclude my remarks. This is an enormous question, and I hope that the hon. Gentleman will forgive me if I do not deal with it in detail. I accept that he does not want to take the money from food subsidies and that he would prefer to take it from defence expenditure. However, that is not the view of the Conservative Party—

Mrs. Kellett-Bowman: Answer.

Mr. Barnett: I have answered the hon. Gentleman, and I believe that I have replied reasonably fully to the debate. I listened carefully to all the speeches. I hope that I shall be forgiven for saying that these amendments have no justification. If the Opposition divide the Committee, I urge my right hon. and hon. Friends to vote against the amendments.

Mrs. Margaret Thatcher: Seldom have I listened to a more unsatisfactory reply to a debate, and seldom have I heard one which angered me more.
First, cannot we get it across to the Chief Secretary that he is taking away £40 million from these people by his action and not giving it to them? He argues about the public sector borrowing requirement. We had the same argument all through our debates on the last Finance Bill, in the course of which Government spokesmen gave the impression that every amendment would add to the borrowing requirement, which was then about £3,000 million. No one revealed at that time that it must have been greatly in excess of £3,000 million. We cannot suddenly have had an additional £3,000 million added between July and November when the Chancellor of the Exchequer announced that it was £6,000 million. No one using that argument to such bad effect then has the right ever to be believed about it again.
Secondly, I return to the argument about retrospection. This is the most savage form of retrospection that I have ever encountered. The precedent which the Chief Secretary gave for it is no precedent at all. I cannot find a precedent, and clearly the right hon. Gentleman has not been able to find one.
Let us consider what has happened. In the last Finance Bill the then Government attempted to fix the rate of tax applicable to these people for this year. That subject was fully and exhaustively debated in this House. It was decided upon, and these people then thought that they knew where they were for their tax this year, and that they could budget. Many of them are used to budgeting. They would not have saved what they have if they had not been. They are also used to forgoing luxuries. They knew where they were, and they could make their budgets accordingly.
There is no precedent that I have been able to find for, within six months of a decision, another Government's saying, in respect of the same tax and the same year, "We intend to put it up. We shall make you pay £40 million more than you budgeted for."
I ask right hon. and hon. Members to consider the time at which the Chief Secretary proposes to exact that additional £40 million. It was in a Budget which put up local rates. My hon. Friends the Members for Bridgwater (Mr. King) and Norfolk, South (Mr. MacGregor) joined me many times in pointing out the greatly increased rates which people in rural areas had to pay. Many of the people whom we are discussing at the moment live in rural areas. Not only have they to pay additional tax; they have also to pay additional rates, and I have received many letters saying that money that had been put aside for additional rates would now have to be used to pay more tax.
The Chancellor of the Exchequer is often very fortunate in the reasonable co-operation that he gets from the Opposition on reasonable economic matters. However, he must understand that this proposal was also in a Budget which increased the rates for gas, electricity and postal charges, because it was necessary to reduce the nationalised industry deficit.
The proposal comes at the very time when people are suffering from inflation, which is a bad enough tax on its own, and many have no thresholds, full or partial, to make it up. They are suffering from a new policy to eliminate nationalised industry deficits. It is at this time that the Chancellor of the Exchequer proposes an additional tax, although this House has already said, this year, that it shall not do so.
Undoubtedly, it is constitutionally technically correct, otherwise we should not be discussing it. I can only say that it is constitutionally amoral, and had it been put to me as a Minister I would not have done it, this House having already decided. The argument that it is technically correct shows that hon. Gentlemen opposite have no argument whatever to suggest. Do they believe that people who have to pay extra rates and extra electricity charges, and who have budgeted not to pay this extra, will be as technical as hon. Gentlemen

opposite? Those people will have to pay this out of their pockets.
The Chief Secretary argues that there will be extra relief, but many people who are adversely affected by the clause will not get extra relief. Even that argument is not valid, for they will have to wait till next year for the extra relief, although the extra taxation penalty comes this year and is in respect of this year.

Mr. Joel Barnett: But payable next year.

Mrs. Thatcher: It is in respect of tax this year, even though it does not have to be paid until next year. The Chief Secretary knows that. But there are many people who will never get an age relief who are adversely affected, and particularly badly affected, by this clause. All the disabled who are under 65 will now have their income subject to an extra surcharge if it exceeds their savings income when it is more than £20 per week. All who have had to retire prematurely, or who have been made redundant—widows, deserted wives and others—and who have a savings income of £20 per week in those categories and are under 65 will stand to pay 43 per cent. taxation at the twenty-first pound—and there is no sympathy from the Chief Secretary for those people. We would wish to show them good will and sympathy.
Many times from the Dispatch Box I have seen Treasury Ministers in difficulties when asked to give some extra relief which, apart from a tiny one, we are not asking now; and frequently they have said, "I would like to do this. I recognise that there is inflation and that some people are in difficulty, but I cannot." That is not the position now. The Chief Secretary is being asked not to give extra relief of any significance but to leave things where they are and to stop imposing an extra penalty. When he is asked to defend this tax he has no answer when we say that he is clobbering people who have saved all their lives, or whose fathers saved for them and then did an awful thing—handing those savings to their children. It might have been an owner-occupied house whose value was inherited by the children and which probably came from savings income in the first place.
When we say these people have suffered enough and we ask the Government to help them, the Chief Secretary says, "We intend to make them suffer". That is his only defence. He says, "We intend to impose an extra penalty". There is no reason whatever for doing so. He then says he would like savings income, but the Government will not encourage it. This Government would prefer savings in the form of Government savings—in taxation—and investment or capital formation in the form of Government investment or capital formation, rather than getting property widely distributed in the hands of the people. As a right hon. Gentleman said from the Liberal bench during the debate last year, a society in which savings and investment are carried out through the Government will soon cease to be a free society.
This Government hate the wide distribution of private property and dislike people enjoying the fruits of savings income. We certainly shall press this amendment to a Division. I had hoped we should get a good deal more sympathy from the Chief Secretary than we have had. Indeed, we have not had any at all. If we are not successful with this amendment the Opposition undertake to reverse this clause when returned to power and thereby to keep the present starting point for the imposition of the additional rate of tax on investment income. We shall also consider further relief, together with the wider question of indexing tax levels. I hope that all my hon. and right hon. Friends will show their displeasure with the Chief Secretary's reply and their support for the savers of Britain by voting for the amendment.

6.45 p.m.

Mr. John Pardoe: Having moved the original amendment on 16th July last, an amendment which has already been referred to, I would like to comment on the Chief Secretary's speech, which I found far less than adequate as a reply to the whole wide-ranging case which has been made on the question of investment income.
Although some hon. Members who have spoken from this side of the House have endangered the Conservative Party

by making it seem to be a middle-class protection society, I have no intention of going along that road, but the right hon. Gentleman the Chief Secretary replied in just such typical class terms and this is not a class debate. This amendment was not about the middle classes last July, nor is it now.
The Chief Secretary says we are not discussing savings income but investment income. He distinguishes between the two. It used to be called unearned income. We have moved on a pace and have another euphemism. Now he calls it savings income. It may well be that we ought to distinguish between income from inherited wealth and income from wealth which is savings over the course of a lifetime. That is, no doubt, a debate we shall be able to have in the Select Committee on a wealth tax.
There are those who derive their savings not only from private savings under their own auspices during their lifetime but from a bona fide pension fund. I hoped we could persuade the Government, if they will not take a step in our direction on the whole of the amendment, at least to make some concession on that level. I would simply point out to the Chief Secretary that the pension fund of the Association of University Teachers is a pension fund that permits one to take out a lump sum and invest it. The Chief Secretary is saying that anyone who takes out a lump sum will be taxed at an increased rate, whereas the person who leaves it in, drawing it from the pension fund and trustees, will get a lower rate. The Chief Secretary did not even begin to make a justification for investment income as such.
The only argument he advanced is one that, as he will realise, does not appeal to me—that the Conservatives did it, too. That is less than an argument. On the question of retrospection the Chief Secretary is perfectly right to say that one Parliament can change what another has done, but in the course of a financial year I would have thought we could at least leave well alone what is done in that one year. It so happens that Parliament in its wisdom—and it was its wisdom—overruled the executive last time. That was a terrible shock to the system and


the establishment. Parliament had got out of the way of controlling the executive, but because, for once, the electoral system worked to the advantage of the British people and of democracy in February last we were able to control the executive, to change legislation, to change the tax legislation of this place, in line with the wish of Parliament rather than that of the executive, and we did so.
The Government now say they have a mandate to change that. They have no such thing. They are denying the sense of the people in this country. But the argument works both ways. When the Leader of the Opposition today tells the Government they have less than 40 per cent. support he really must follow that through.
This legislation is being proposed today by the Government and it will be carried because they will probably win the vote. I shall certainly vote against them, but it will be enacted till all who are to pay this increased investment income surcharge realise why. It is because we have a crazy electoral system. If we had the right electoral system we would not have the kind of class legislation and the Left-wing Trotskyite nostrums we get out of the Labour Party.

Mr. Gwilym Roberts: I am interested in the hon. Gentleman's comments on the electoral system. Would he like to tell me how many Liberal—[Interruption.]

The Deputy Chairman: Order. The hon. Member was making a passing reference to the electoral system. I am not going to permit any discussion of the electoral system on this amendment.

Mr. Pardoe: You are absolutely right, Sir Myer.
I am glad that the Leader of the Opposition is now here. All I was pointing out was, that with an intelligent electoral system we would not have a Marxist dominated Labour Government and we should be able to secure our way today.
The Chief Secretary referred to the borrowing reqirement and said that the Government were all in favour of increasing public expenditure. I remind

the right hon. Gentleman that in the debate on 16th July he referred to the Opposition's determination to spend money and to our determination to reduce taxes by an extra £300 million on advance corporation tax. It is within the memory of many right hon. and hon. Members that the Chancellor of the Exchequer thundered in the Chamber about the Opposition's rights to overturn the Government's Budget judgment.
I am glad that the right hon. Member for Carshalton (Mr. Carr) is here. What a pity it was that all of us did not have the courage of our convictions on that day and stand firm on the parliamentary control of the executive, because then many British companies would not be in the mess they are in now and the Government would not have had to eat their words as they have had to since then. So let us not have any nonsense from the Government about increasing the borrowing requirement.
We are talking about a cost of £53 million. It is the Government who are changing the situation, not the Opposition. We changed it last time and we got our way. These people are not wealthy. They do not have to be asked to pay for the social contract, which is really the argument behind the Government's whole case. These are not people who should pay for the social contract.
If priorities are to be put forward as to the use of this money, let me try a priority on the financial sector. It may well be that there are people in this country more deserving of concessions than some of the people who would benefit from this concession, but does the hon. Gentleman really believe that the 614 under-secretaries in Whitehall are more deserving of an increase of £3,000 a year than are the people who would benefit if we were able to carry this amendment today? If we are to deal in the language of priorities, anybody can quote his own.
I am merely saying to the Chief Secretary that it does not seem to me that he has made his case. I ask the Government to leave well alone. It was a good day for Parliament when we carried that amendment on 16th July, and we should be allowed to keep it that way.

Question put, That the amendment be made:—

The Committee divided: Ayes 256, Noes 267.

Division No. 53.]
AYES
[6.54 p.m.


Adley, Robert
Gilmour, Rt Hon Ian (Chesham)
Mayhew, Patrick


Aitken, Jonathan
Gilmour, Sir John (East Fife)
Meyer, Sir Anthony


Alison, Michael
Glyn, Dr Alan
Miller, Hal (Bromsgrove)


Arnold, Tom
Godber, Rt Hon Joseph
Mills, Peter


Atkins, Rt Hon H. (Spelthorne)
Goodhew, Victor
Mitchell, David (Basingstoke)


Awdry, Daniel
Goodlad, Alastair
Moate, Roger


Bain, Mrs Margaret
Gorst, John
Molyneaux, James


Baker, Kenneth
Gow, Ian (Eastbourne)
Monro, Hector


Banks, Robert
Gower, Sir Raymond (Barry)
Montgomery, Fergus


Beith, A. J.
Grant, Anthony (Harrow C)
Moore, John (Croydon C)


Bell, Ronald
Gray, Hamish
More, Jasper (Ludlow)


Bennett, Dr Reginald (Fareham)
Grieve, Percy
Morgan-Giles, Rear-Admiral


Benyon, W.
Grimond, Rt Hon J.
Morris, Michael (Northampton S)


Berry, Hon Anthony
Grist, Ian
Morrison, Charles (Devizes)


Biffen, John
Grylls, Michael
Morrison, Peter (Chester)


Biggs-Davison, John
Hall, Sir John
Neave, Airey


Blaker, Peter
Hall-Davis, A. G. F.
Nelson, Anthony


Body, Richard
Hamilton, Michael (Salisbury)
Neubert, Michael


Boscawen, Hon Robert
Hannam, John
Newton, Tony


Bowden, A. (Brighton, Kemptown)
Harvie Anderson, Rt Hon Miss
Nott, John


Boyson, Dr Rhodes (Brent)
Havers, Sir Michael
Onslow, Cranley


Braine, Sir Bernard
Hawkins, Paul
Oppenheim, Mrs Sally


Brittan, Leon
Hayhoe, Barney
Osborn, John


Brotherton, Michael
Heath, Rt Hon Edward
Page, John (Harrow West)


Brown, Sir Edward (Bath)
Henderson, Douglas
Page, Rt Hon R. Graham (Crosby)


Bryan, Sir Paul
Hicks, Robert
Pardoe, John


Buchanan-Smith, Alick
Higgins, Terence L.
Parkinson, Cecil


Buck, Antony
Hooson, Emlyn
Pattie, Geoffrey


Budgen, Nick
Hordern, Peter
Peyton, Rt Hon John


Bulmer, Esmond
Howe, Rt Hon Sir Geoffrey
Pink, R. Bonner


Burden, F. A.
Howell, David (Guildford)
Powell, Rt Hon J. Enoch


Carlisle, Mark
Howells, Geraint (Cardigan)
Price, David (Eastleigh)


Carr, Rt Hon Robert
Hunt, John
Prior, Rt Hon James


Chalker, Mrs Lynda
Hurd, Douglas
Pym, Rt Hon Francis


Channon, Paul
Hutchison, Michael Clark
Raison, Timothy


Churchill, W. S.
Irving, Charles (Cheltenham)
Rathbone, Tim


Clark, Alan (Plymouth, Sutton)
James, David
Rees, Peter (Dover &amp; Deal)


Clark, William (Croydon S)
Jenkin, Bt Hon P. (Wanst'd &amp; W'df'd)
Rees-Davies, W. R.


Clarke, Kenneth (Rushcliffe)
Johnson Smith, G. (E Grinstead)
Reid, George


Cockcroft, John
Joseph, Rt Hon Sir Keith
Renton, Rt Hon Sir D. (Hunts)


Cooke, Robert (Bristol W)
Kaberry, Sir Donald
Renton, Tim (Mid-Sussex)


Cope, John
Kellett-Bowman, Mrs Elaine
Rhys Williams, Sir Brandon


Cormack, Patrick
Kershaw, Anthony
Ridley, Hon Nicholas


Corrie, John
Kilfedder, James
Ridsdale, Julian


Costain, A. P.
Kimball, Marcus
Rifkind, Malcolm


Craig, Rt Hon W. (Belfast E)
King, Evelyn (South Dorset)
Roberts, Michael (Cardiff NW)


Crawford, Douglas
King, Tom (Bridgwater)
Roberts, Wyn (Conway)


Critchley, Julian
Kitson, Sir Timothy
Rodgers, Sir John (Sevenoaks)


Crouch, David
Knight, Mrs Jill
Ross, William (Londonderry)


Crowder, F. P.
Knox, David
Rossi Hugh (Hornsey)


Dean, Paul (N Somerset)
Lamont, Norman
Rost, Peter (SE Derbyshire)


Dodsworth, Geoffrey
Lane, David
Royle, Sir Anthony


Douglas-Hamilton, Lord James
Latham, Michael (Melton)
Scott, Nicholas


Drayson, Burnaby
Lawrence, Iven
Shaw, Giles (Pudsey)


du Cann, Rt Hon Edward
Lawson, Nigel
Shelton, William (Streatham)


Durant, Tony
Le Merchant, Spencer
Shepherd, Colin


Dykes, Hugh
Lester, Jim (Beeston)
Shersby, Michael


Eden, Rt Hon Sir John
Lewis, Kenneth (Rutland)
Silvester, Fred


Edwards, Nicholas (Pembroke)
Lloyd, Ian
Sims, Roger


Elliott, Sir William
Loveridge, John
Sinclair, Sir George


Emery, Peter
Luce, Richard
Skeet, T. H. H.


Evans, Gwynfor (Carmarthen)
MacCormick, Iain
Smith, Cyril (Rochdale)


Eyre, Reginald
McCrindle, Robert
Smith, Dudley (Warwick)


Fairgrieve, Russell
McCusker, H.
Speed, Keith


Farr, John
Macfarlane, Neil
Spence, John


Fell, Anthony
MacGregor, John
Spicer, Jim (W Dorset)


Finsberg, Geoffrey
Macmillan, Rt Hon M. (Farnham)
Spicer, Michael (S Worcester)


Fisher, Sir Nigel
McNair-Wilson, M. (Newbury)
Sproat, Iain


Fletcher, Alex (Edinburgh N)
McNair-Wilson, P. (New Forest)
Stainton, Keith


Fookes, Miss Janet
Madel, David
Stanbrook, Ivor


Fowler, Norman (Sutton C'f'd)
Marshall, Michael (Arundel)
Stanley, John


Fox, Marcus
Marten, Neil
Steel, David (Roxburgh)


Fraser, Rt Hon H. (Stafford &amp; St)
Mates, Michael
Steen, Anthony (Wavertree)


Freud, Clement
Mather, Carol
Stewart, Donald (Western Isles)


Galbraith, Hon. T. G. D.
Maude, Angus
Stewart, Ian (Hitchin)


Gardiner, George (Reigate)
Mawby, Ray
Stokes, John


Gardner, Edward (S Fylde)
Maxwell-Hyslop, Robin
Taylor, R. (Croydon NW)




Taylor, Teddy (Cathcart)
Walder, David (Clitheroe)
Wigley, Dafydd


Tebbit, Norman
Walker, Rt Hon P. (Worcester)
Wilson, Gordon (Dundee E)


Thatcher, Rt Hon Margaret
Walters, Dennis
Winterton, Nicholas


Thomas, Rt Hon P. (Hendon S)
Warren, Kenneth
Young, Sir G. (Ealing, Acton)


Thompson, George
Watt, Hamish
Younger, Hon George


Townsend, Cyril D.
Weatherill, Bernard



van Straubenzee, W. R.
Wells, John
TELLERS FOR THE AYES:


Viggers, Peter
Welsh, Andrew
Mr. John Stradling Thomas and


Wainwright, Richard (Coine V)
Whitelaw, Rt Hon William
Dr. Gerard Vaughan.


Wakeham, John
Wiggin, Jerry





NOES


Allaun, Frank
Edwards, Robert (Wolv SE)
Lewis, Ron (Carlisle)


Archer, Peter
Ellis, Tom (Wrexham)
Lipton, Marcus


Armstrong, Ernest
English, Michael
Litterick, Tom


Ashton, Joe
Ennals, David
Loyden, Eddie


Atkins, Ronald (Preston N)
Evans, Ioan (Aberdare)
Luard, Evan


Atkinson, Norman
Evans, John (Newton)
Lyon, Alexander (York)


Bagier, Gordon A. T.
Ewing, Harry (Stirling)
Lyons, Edward (Bradford W)


Barnett, Guy (Greenwich)
Faulds, Andrew
Mabon, Dr J. Dickson


Barnett, Rt Hon Joel
Fernyhough, Rt Hon E.
McCartney, Hugh


Bates, Alf
Flannery, Martin
McElhone, Frank


Bean, R. E.
Fletcher, Raymond (Ilkeston)
MacFarquhar, Roderick


Bennett, Andrew (Stockport N)
Fletcher, Ted (Darlington)
Mackenzie, Gregor


Bidwell, Sydney
Foot, Rt Hon Michael
McMillan, Tom (Glasgow C)


Bishop, E. S.
Ford, Ben
Madden, Max


Blenkinsop, Arthur
Forrester, John
Magee, Bryan


Boardman, H.
Fowler, Gerald (The Wrekin)
Mahon, Simon


Booth, Albert
Fraser, John (Lambeth, N'w'd)
Marks, Kenneth


Boothroyd, Miss Betty
Garrett, John (Norwich S)
Marquand, David


Bottomley, Rt Hon Arthur
Garrett, W. E. (Wallsend)
Marshall, Dr Edmund (Goole)


Boyden, James (Bish Auck)
George, Bruce
Marshall, Jim (Leicester S)


Bradley, Tom
Gilbert, Dr John
Mason, Rt Hon Roy


Broughton, Sir Alfred
Ginsburg, David
Meacher, Michael


Brown, Hugh D. (Provan)
Golding, John
Mellish, Rt Hon Robert


Brown, Robert C. (Newcastle W)
Gould, Bryan
Mendelson, John


Buchan, Norman
Gourlay, Harry
Mikardo, Ian


Buchanan, Richard
Grant, George (Morpeth)
Millan, Bruce


Butler, Mrs Joyce (Wood Green)
Grant, John (Islington C)
Miller, Dr M. S. (E Kilbride)


Callaghan, Jim (Middleton &amp; P)
Grocott, Bruce
Miller, Mrs Millie (Ilford N)


Campbell, Ian
Hamilton, W. W. (Central Fife)
Mitchell, R. C. (Soton, Itchen)


Canavan, Dennis
Hamling, William
Molloy, William


Cant, R. B.
Hardy, Peter
Moonman, Eric


Carmichael, Neil
Harper, Joseph
Morris, Alfred (Wythenshawe)


Carter, Ray
Harrison, Walter (Wakefield)
Morris, Charles R. (Openshaw)


Carter-Jones, Lewis
Hattersley, Rt Hon Roy
Morris, Rt Hon J. (Aberavon)


Cartwright, John
Hatton, Frank
Mulley, Rt Hon Frederick


Castle, Rt Hon Barbara
Hayman, Mrs Helene
Murray, Ronald King


Clemitson, Ivor
Heffer, Eric S.
Newens, Stanley


Cocks, Michael (Bristol S)
Hooley, Frank
Noble, Mike


Cohen, Stanley
Horam, John
Oakes, Gordon


Coleman, Donald
Hoyle, Douglas (Nelson)
Ogden, Eric


Colquhoun, Mrs Maureen
Huckfield, Les
O'Malley, Rt Hon Brian


Concannon, J. D.
Hughes, Rt Hon C. (Anglesey)
Orbach, Maurice


Cook, Robin F. (Edin C)
Hughes, Mark (Durham)
Ovenden, John


Cox, Thomas (Tooting)
Hughes, Robert (Aberdeen N)
Owen, Dr David


Craigen, J. M. (Maryhill)
Hughes, Roy (Newport)
Padley, Walter


Cronin, John
Hunter, Adam
Park, George


Crosland, Rt Hon Anthony
Irvine, Rt Hon Sir A. (Edge Hill)
Parker, John


Cryer, Bob
Jackson, Miss Margaret (Lincoln)
Parry, Robert


Cunningham, Dr J. (Whiteh)
Janner, Greville
Pavitt, Laurie


Dalyell, Tam
Jay, Rt Hon Douglas
Peart, Rt Hon Fred


Davidson, Arthur
Jeger, Mrs Lena
Pendry, Tom


Davies, Bryan (Enfield N)
Jenkins, Hugh (Putney)
Perry, Ernest


Davies, Denzil (Llanelli)
John, Brynmor
Phipps, Dr Colin


Davies, Ifor (Gower)
Johnson, James (Hull West)
Prentice, Rt Hon Reg


Davis, Clinton (Hackney C)
Johnson, Walter (Derby S)
Prescott, John


Deakins, Eric
Jones, Alec (Rhondda)
Price, C. (Lewisham W)


de Freitas, Rt Hon Sir Geoffrey
Jones, Barr (cast Flint)
Price, William (Rugby)


Delargy, Hugh
Jones, Dan (Burnley)
Radice, Giles


Dell, Rt Hon Edmund
Judd, Frank
Rees, Rt Hon Merlyn (Leeds S)


Dempsey, James
Kaufman, Gerald
Richardson, Miss Jo


Doig, Peter
Kelley, Richard
Roberts, Albert (Normanton)


Dormand, J. D.
Kerr, Russell
Roberts, Gwilym (Cannock)


Douglas-Mann, Bruce
Kilroy-Silk, Robert
Robertson, John (Paisley)


Duffy, A. E. P.
Kinnock Neil
Roderick, Caerwyn


Dunn, James A
Lambie, David
Rodgers, George (Chorley)


Dunnett, Jack
Lamborn, Harry
Rodgers, William (Stockton)


Dunwoody, Mrs Gwyneth
Lamond, James
Rooker, J. W.


Eadie, Alex
Leadbitter, Ted
Roper, John


Edelman, Maurice
Lee, John
Rose, Paul B.


Edge, Geoff
Lewis, Arthur (Newham N)
Ross, Stephen (Isle of Wight)







Rowlands, Ted
Swain, Thomas
White, Frank R. (Bury)


Ryman, John
Taylor, Mrs Ann (Bolton W)
White, James (Pollok)


Sandelson, Neville
Thomas, Jeffrey (Abertillery)
Whitehead, Phillip


Sedgemore, Brian
Thomas, Ron (Bristol NW)
Willey, Rt Hon Frederick


Selby, Harry
Thorne, Stan (Preston South)
Williams, Alan (Swansea W)


Shaw, Arnold (Ilford South)
Tierney, Sydney
Williams, Alan Lee (Hornch'ch)


Sheldon, Robert (Ashton-u-Lyne)
Tinn, James
Williams, Rt Hon Shirley (Hertford)


Short, Rt Hon E. (Newcastle C)
Tomlinson, John
Williams, W. T. (Warrington)


Silkin, Rt Hon John (Deptford)
Torney, Tom
Wilson, Alexander (Hamilton)


Silverman, Julius
Tuck, Raphael
Wilson, Rt Hon H. (Huyton)


Skinner, Dennis
Urwin, T. W.
Wilson, William (Coventry SE)


Small, William
Wainwright, Edwin (Dearne V)
Wise, Mrs Audrey


Smith, John (N Lanarkshire)
Walden, Brian (B'ham, L'dyw'd)
Woodall, Alec


Snape, Peter
Walker, Harold (Doncaster)
Wool, Robert


Spearing, Nigel
Walker, Terry (Kingswood)
Wrigglesworth, Ian


Spriggs, Leslie
Watkins, David
Young, David (Bolton E)


Stallard, A. W.
Watkinson, John



Stewart, Rt Hn M. (Fulham)
Weetch, Ken
TELLERS FOR THE NOES:


Stoddart, David
Weitzman, David
Mr. James Hamilton and


Stott, Roger
Wellbeloved, James
Mr. John Ellis.


Strang, Gavin

Question accordingly negatived.

Mr. Pardoe: I beg to move Amendment No. 3, in page 4, line 1, after 'more', insert:
'or that she is a widow with children in full-time education'.

The Deputy Chairman: With this we may discuss the following amendments:
No. 5, in page 4, line 1, after 'more', insert 'or
(ii) she was a woman not being a married person living with her husband and not being a woman for whom her husband has claimed and been allowed for the higher relief under section 8(1) of the Taxes Act whose age was 60 years or more'.
No. 7, in page 4, line 1, after 'more', insert 'or
(ii) she was a widow with a child or children in respect of which she was entitled to relief under the Income Tax Acts; or
(iii) she was a widow in receipt of National Insurance widow's benefit; or
(iv) she was the widow of such a person as is mentioned in paragraph I of Schedule 7 to this Act'.

Mr. Pardoe: We are not here debating the principles of investment surcharge and we can state the debate in more moderate and, I hope, agreed terms, because I am sure that the Financial Secretary could not possibly throw out such a reasonable amendment. We are limiting the amendment considerably. There are 3 million widows in Britain. There are 500,000 widows under the age of 54 with dependent children. We are here talking about widows with dependent children in full-time education. It is a small number of people, but an important section of the community, and one which, in our view, and in the view

of many hon. Members, has not always had a fair deal from our taxation system.
One of the problems is that it is often said that widows ought to be able to increase their incomes by going out to work in the same way as single people. If the widow has no dependent children that is perfectly true and there is no reason, certainly with younger widows, why we should feel that they need more generous treatment than single women, but we are concerned with this special group of widows who are not able to go out and earn.
The Government may say—I hope they do not—that widows are still able to go out because the Government have ensured that they can set off the cost of home helps against their tax allowance up to the sum of £100. That is hardly a realistic figure for a home help. In any case, the additional personal allowance of £180 given to single parents looking after children disqualifies the parent from receiving the £100 for the home help. We can see the reason for that, but it means that however the widow arranges her affairs, whether she brings in a home help or looks after the children herself, she is economically a disadvantaged person.
The Government are proposing to give special consideration to those over the age of 65. What we are proposing is that another, small group of people should be considered in the same way as those older people. To put it in context, it may help if we spell out what I calculate is the difference in the tax paid on £2,000 of investment income. The Government's proposals for those under


65 would mean that a person paying income tax at the standard rate would pay £760. Over the age of 65 that person will pay £710. We suggest that widows should be treated in the same way, which means removing £50 from the tax liability of a widow with an investment income of £2,000.
I see no reason why this should be an excessive strain on the borrowing requirement. It cannot cost very much, and I am sure that the Financial Secretary will tell us how much. He must accept in principle that widows are a deserving section of the community, and I hope that he will feel able to accept this limited amendment.

Mr. Cormack: I support what the hon. Member for Cornwall, North (Mr. Pardoe) said. The Financial Secretary, in a letter, dated 9th October, to one of his colleagues, recognised that widows were a special case and that they deserved special consideration, but he did not specify the consideration. The modest proposal outlined should commend itself to the Financial Secretary and I hope that he will at least do something for widows.
The hon. Member for Cornwall, North seemed to accept that it was reasonably fair to treat widows on the same lines as single women, but I do not agree with that. A strong campaign has been mounted by the National Association of Widows on this matter, but it would be out of order for me to expand on that—

Mr. Pardoe: I do not want the hon. Gentleman to run away with the idea that I said exactly what he seems to think I said. The view I expressed was that the younger widow who has no dependent children does not have a strong case to be treated differently. There may be a matrimonial home to be kept up, but that case is not as strong as it is for the older widow and the widow with children.

Mr. Cormack: I am glad the hon. Gentleman has clarified that.
I hope that in a Bill which is not noticeable for its charity to particularly deserving groups of people there will be a melting of the ice. I hope that there will be a smile on the face of the Financial Secretary when he rises at the Dispatch

Box, and a little comfort for us when he replies to this amendment and the others which follow.

Mr. Peter Hordern: This group of amendments is concerned with the position of widows, in various categories, and single women. We are concerned with the way in which they are affected by the proposal to place a surcharge on investment income. As was made clear in our debate on the previous group of amendments, the general position is that a few months ago the House of Commons increased the level at which the surcharge on investment income would operate from £1,000 to £2,000 for the year 1974–75. The Government propose now to act retrospectively, almost at the end of the current financial year, to reduce the level at which the investment surcharge operates from £2,000 to £1,000.
Meanwhile, nothing that the Government have done in the last few months has worked to the advantage of widows. The measures announced by the Chancellor in his Budget speech on 12th November to improve widows' pensions will not take effect until next April. The Government are deliberately taking a gratuitous swipe at many widows—the people who are least able to fend for themselves.
I recognise that the age allowance will help widows who reach the age of 65, but that allowance does not come into operation until 1975–76. Money is being taken by the Government from widows with children and single women if they happen to have a modest investment income. The Chancellor described the reduction of the level at which the surcharge on investment income operates in these words:
This means sacrifices for those at the upper end of the scale."—[Official Report, 12th November 1974; Vol. 881, c. 274.]
The Labour Government are living in another world if they think that that is the position. If they believe that people with an investment income of over £1,000 a year form a relatively small, wealthy but diminishing band of people, they are entirely mistaken. I do not have the most recent figures, but in 1970–71 there were more than 4½ million people with investment incomes of over £1,000 a year. The number must have swelled considerably since that time, and the Committee would


be interested to know from the Financial Secretary what the figures are now.
7.15 p.m.
The number has grown and will grow in future as the number of new life policies mature. There are more than 16 million ordinary life policies in existence, and 92 million industrial life policies. There are more than 7½ million members of group pension schemes, some of whom may get a capital payment instead of a pension arrangement. Altogether, 78 per cent. of all households have life policies of one kind or another.
The Government would be mistaken to think that the proposal contained in the clause will affect only a relatively small band of people. This large proportion of households would not have tried to protect themselves against inflation and the inadequacy of the present pension unless they felt that it was essential to do so. It is not just a small dwindling band of people who will be affected, but the great majority of people who hope to have a maturing life policy which will be of benefit to themselves and their widows.
It will be argued that the income from many maturing policies will not reach £1,000. That may be the position at the moment, but when one remembers that 78 per cent. of households think it necessary to have life policies independent of anything which the State may provide, the only question is how long it will be before they find any income below £1,000 a year totally inadequate. At the current rate of inflation that will not take long. Even next April, when the widows' flat rate pension is increased to £11·60, widows will still have a pitifully small amount on which to manage.
Whatever happens to the Secretary of State's new pension proposals, everyone will recognise that the new scheme is not a genuinely funded scheme. The money will have to be found by future generations. Few people will be entirely happy about the Government's pension proposals and few will not think it necessary to supplement the Government pension by a life policy. A large proportion of households having already decided that that is the position, they now see what the Government propose to do if the life policy matures and brings in a reasonable income of £1,000 or more.
Let us consider the widows and single women who are covered by the amendment. I shall quote from a letter which a constituent of mine sent to the Chancellor immediately after the Budget. Thinking that she and other single women in her position had been put to some advantage, she said:
It was very encouraging to learn from the Budget yesterday that the age allowance for pensioners is to be increased for the single from £810 to £950, but I have been amazed to find that this does not apply to single women until they reach the age of 65 in spite of the fact that the retirement pension can start at age 60. Is not this rather unfair and cannot you do something about it? … I shall be 62 years of age next May and hope to retire from full-time employment after what has been 45 strenuous years.
So that lady, who has worked hard all her life, does not get an age allowance even though she has reached retirement age, yet it is probable that she and others like her, who have worked hard all their lives, have saved regularly through an endowment to provide themselves with a capital sum at 60 or whenever they retire. Some may even acquire capital from their firms. They do not regard themselves as being at the upper end of the scale, for in these days it requires an investment of only £6,000 in war loan to produce an income of £1,000. Therefore, by no stretch of the imagination can such people be considered rich. Yet they are the people selected by the Government for this form of higher taxation.
Amendment No. 5 refers to women deserted by their husbands and also to divorced women with maintenance settlements. Amendment No. 7 refers to widows in various categories. All these people will be hit hard by the Government's proposals in this financial year and will gain no extra benefit until the next financial year. They have seen the value of their savings fall drastically in the last year or so, and the effect of inflation has been disastrous. This is the ugly face of the social contract. Although trade unionists will not accept a fall in their standard of living, widows who receive far less money not only face a cut in their standard of living through inflation but are now to pay extra tax.
The National Institute of Economic and Social Research says that consumer prices this year will rise by well over 20 per cent. The price of coal rose by


19 per cent. last November, electricity by 6 per cent. from 1st January this year, and the price of gas increased by 12 per cent. Furthermore, general rates and water rates are going through the roof, and we are told that we are to have a 7½p postage stamp in the spring, and higher telephone charges. What sort of social justice can those proposals bring about?
What of the position of widows whose husbands have been killed on active service in the Armed Forces in Northern Ireland? Some of those women may have received awards under the Criminal Injuries to Persons (Compensation) Act. I understand that payments of £20,000 have been made. When those payments were considered, was the tribunal aware that the income from the award would be taxed at a higher rate? I cannot believe that is the case. Are these the people whom the Government feel should be taxed more heavily? They are the widows of soldiers. Is it not bad enough that forces' widows' pensions are taxed already? I cannot believe the Government are aware of the damage they are doing. Instead of allowing the level at which tax starts to be raised in line with the cost of living, they have reduced the baseline. This will savagely affect thousands of women who have saved much of their earnings over the years, and thousands more widows whose husbands have sought to provide for them in case of their death, the most natural and honourable instinct that man possesses.
The Government have a strange sense of priority. They seem to want to protect the average wage-earner on £50 per week against inflation, while at the same time placing an extra burden on those who have been widowed and are earning far less. For these reasons, I hope that the amendments will be carried.

Mr. Nicholas Ridley: I should like to support the remarks made by my hon. Friend the Member for Horsham (Mr. Hordern) in a fair and telling speech. The singling out of this form of income for savage and extra taxation is one of the most obvious signs of class bias which one could have expected of the present Government. The Government have got the

situation wrong because a very large number of ordinary people who are far from wealthy will be affected by the tax. If there is one group of persons to whom we have special obligations it is surely women who find themselves single, having been married and very often with children or families to bring up. They may be divorced, separated or widowed, and I believe that they comprise a deserving group of people to whom we should afford the relief that is provided in the amendment.
I do not think the Financial Secretary knows what these people are going through. Many of my constituents have suffered a 50 per cent. increase in their rates and have seen an impost of 20 per cent. on practically everything they have bought in the last year. They have noted various other unfriendly actions by the Government, and they feel despair. Widows and single women with houses to maintain and families to raise are probably one of the hardest hit groups in our society.
I commend the amendments, but I wish to put another suggestion to the Government. Perhaps there is a distinction to be made between a single woman with a family or children to look after and a house or flat to maintain or to pay for and a woman who is single totally in the sense that she has no dependants and can live with her parents or a friend and does not necessarily have to be a householder in her own right. I do not like making such distinctions since they are invidious, but when the Government are determined to oppress people in that category it is possible to point to even worse cases. I refer to widows with young families who cannot go out to work satisfactorily because they have to look after children. They can undertake part-time work, but they still have to maintain their home. That group of women finds it difficult to manage and the difficulties tend to wash off on to their children—and this is what will happen if we do nothing to help them.
It may be that this concession will not be acceptable to the Government. If so, will they look at the possibility of married persons' income tax allowances being made available to single women who are householders? It is surely the ultimate insult that a single person's allowance


should apply to a woman whose husband has died and whose income as a result of that death has considerably declined. I put that forward as an alternative suggestion.
There is one other matter which I should like to mention relating to women in this category. Since they are occupied in bringing up families, they have probably severed connections with any job which they had previously. If a single woman is fully involved in bringing up a family, it is difficult for her to go out to work. She has not the opportunity to convert a lump sum pension into a small business or shop since because of family ties she cannot manage such a business. It is particularly obnoxious to treat a women's income from those sources as if it were investment and to suggest that it should be more heavily taxed. A man in a similar income position can often take over a small shop and turn his income into earned income and thereafter get out of the investment income surcharge. It is easier for a man to take such a course than for a woman. The investment income surcharge in the income range which we are now discussing hits a woman in that bracket extremely hard.
I notice the Financial Secretary shrinking deeper and deeper into his seat as he thinks about these arguments. I genuinely urge him to consider the great hardship which many of my constituents are suffering because of the present economic climate. It is quite uncharitable to heap upon them this extra burden. I hope that he will accept this group of amendments as one way of showing our concern for women who find themselves in the situation, which we have sought to outline.

7.30 p.m.

The Financial Secretary to the Treasury (Dr. John Gilbert): I am grateful to hon. Gentlemen opposite for the spirit of moderation in which they have moved this important group of amendments.
The amendments seek to extend the number of categories for whom the investment income surcharge threshold will start at £1,500 rather than at £1,000, as will be the situation for the main body of taxpayers. They seek to include a number of categories. Amendment No. 3,

moved by the hon. Member for Cornwall, North (Mr. Pardoe), seeks to include widows with children in full-time education. Amendment No. 7, moved by the hon. Member for Horsham and Crawley (Mr. Hordern), seeks to cover widowed mothers entitled to tax relief for one or more children, widows in receipt of the national insurance widow's benefit and widows of Service men and others, irrespective of age, who were either killed on active service or died from wounds suffered thereon. Finally, Amendment No. 7 relates to women at 60 years of age separated, divorced or widowed.
I think that I shall carry the Committee with me when I say that the problems of widows attract sympathy from successive Governments and Members of all political persuasions. We could not fail, as ordinary constituency Members of Parliament, let alone from the correspondence that we receive as Ministers, to be aware of the great difficulties facing widows, particularly those with small children. I hope that I shall be able to demonstrate to the satisfaction of the Committee that the Government are not without practical sympathy for women in this position, certainly through no wish of their own, even though—it is as well to disclose this now—I shall not be able to advise my hon. Friends to accept the amendments.
This Government have done a considerable amount for widows. We would wish to do more. Any Government would want to do more. Any Treasury Minister would like to say that the relief shall be greater for every deserving category than it has been so far. Any Minister in the Department of Health and Social Security would like to say that the benefits will be bigger and will cover a wider range of deserving cases than present circumstances allow. I hope to demonsrate that we are not only conscious of these problems but have given practical help right across the board to widows of all grades of means. The help that has been given is by no means confined to widows who are enjoying, if that is the right word, supplementary benefits as their main source of income.
I recognise the particular interest in this subject of the hon. Member for Staffordshire, South-West (Mr. Cormack). I know of his connection with the All-Party Women's Group. The hon. Gentleman and I have had various contacts with widows in Staffordshire, because the


National Association of Widows was founded in that part of the country. No doubt Mrs. June Hemer has been in touch with the hon. Gentleman, just as she has been in touch with me. I have received delegations and discussed many problems at great length.
I am sure that the hon. Gentleman and his hon. Friend the Member for Horsham and Crawley will accept that while it is tragic for any woman to become a widow, particularly in view of events in Northern Ireland, the point is not so much how her husband is taken from her but the fact that he is taken from her. That is the real tragedy. However, we should not attempt to construct tax law on the basis of the circumstances in which a woman suffers a tragic loss of that kind. It would be invidious to try to discriminate between the different circumstances which lead to widowhood.

Mr. Hordern: Does the hon. Gentleman accept that a tribunal assessing the invidious and dreadful task of what a widow should get in these circumstances must take account of the tax position? Does he recognise that the tax position has been changed retrospectively after a tribunal has decided what course to pursue?

Dr. Gilbert: I accept that no tribunal can take account of future changes in tax policy. Precisely the same considerations apply where a widow, for example, receives damages as a result of a claim for damages arising from negligent driving. The court will allow damages and the same considerations will apply. I am sure that the hon. Gentleman, who is fair-minded, will recognise that we should not construct tax law to discriminate between various types of unfortunate tragic circumstances which can lead to widowhood.

Mr. Cormack: Surely there is an unanswerable argument for treating specially the kind of lump sum payment that comes to a woman because of the tragic sudden death of her husband, be it in a car crash or in Northern Ireland. It must be wrong to treat such a lump sump payment as if it were an ordinary lump sum producing investment income.

Dr. Gilbert: There are difficulties here. I recognise that the hon. Gentleman and

his hon. Friend the Member for Horsham and Crawley are striving to achieve a form of equity. I hope that they will acquit me of deliberately trying not to strive for equity. However, I should point to other equally unfortunate circumstances where a woman may be widowed and it is impossible for her to prove negligence—a hit-and-run driver may have been responsible—and she gets no damages. She is worse off. She is in no way benefiting from the proposals. I am not suggesting that the hon. Member for Horsham and Crawley has deliberately overlooked that situation. I am merely pointing to the difficulties that arise when we try to identify one set of circumstances as particularly deserving of relief where they have created a tragic situation. It is difficult to legislate in that way. It would create a great sense of inequity on the part of many widows who would not benefit from a provision of this kind being enacted.
The hon. Member for Horsham and Crawley asked in parentheses whether I could give him any further up-to-date figures. I cannot without notice. I am sure that he will understand that it is impossible to be briefed on all the statistics that might be asked for on any one amendment. I will endeavour to get the figures for him and will write to him as soon as possible.
Turning to the more general principle on which I was touching in reply to the intervention by the hon. Member for Staffordshire, South-West, by the very nature of things tax relief can help only those widows who pay tax. The hon. Member for Horsham and Crawley said that many people have an investment income of over £1,000 a year. That is quite right. However, a great many widows are far more likely to be in the category of those without investment income of that kind.

Mr. Hordern: With the fall in Stock Market prices in the last two years, a life policy that matures now is more likely to produce an income of £1,000 when that sum is invested than for many years. Consequently, a large and growing number of people will be affected by this increase in tax. Therefore, the hon. Gentleman must tell us not only what the position is in a retrospective way but what he proposes to do about the situation in future.

Dr. Gilbert: I hope that the hon. Gentleman will accept that tax allowances fall to be reviewed in the Chancellor's annual Spring Budget. We have almost got to the point of downgrading the Spring Budget because we have so many Budgets and financial adjustments these days. That is not a bad thing. [Interruption.] Hon. Gentlemen opposite may mock, but I am virtually echoing the words of the Leader of the Opposition. I do not know how much weight he carries with all hon. Gentlemen opposite. Be that as it may, he said that he thought that it was no bad thing if the management of the economy was not confined to a single budgetary occasion each year. I entirely agree with him. The personal allowances still fall to be reviewed once a year, and my right hon. Friend will bring in Budget proposals in the next few weeks. That would be the appropriate occasion on which to debate changes in the present scale of allowances.
These amendments address themselves to those relatively—I emphasise the word "relatively" before anyone jumps down my throat—more fortunate widows who pay tax on an investment income of £1,000 a year or more. They are the only widows helped by this group of amendments. A widow with no, or more modest, investment income gets no relief. Of course I do not say that those who support the amendments are not concerned with all widows, just as I hope that they would acquit me of not being concerned about the widows here affected just because I cannot advise my hon. Friends to support the amendments.
This Government have increased national insurance pensions for all widows entitled to them, regardless of their means. We have increased them by the biggest amounts ever, not solely in money terms but in real terms. I do not seek any great plaudits for that. This is a matter of justice and of distribution of taxpayers' money which I think all taxpayers will welcome. I am sure that I carry all hon. Members with me in that respect.
Amendment No. 3 deals with the special category of widows with children in full-time education. Probably due to a drafting slip, it does not refer to the widow with only one child in full-time education, but I do not rest my defence on that. The Government have given

a £50 increase in the additional personal allowances to all single parents, regardless of whether or not the children are in full-time education. In other words, it covers widows with children who are too young to be in full-time education and who are, therefore, inhibited from going out to work. One would have hoped to do more, but at least that fact is another piece of evidence that the plight of single-parent families, including those of widows, is one of which we are very much aware.
Amendment No. 5 introduces a technical difficulty by producing a new element of sex discrimination in the tax system. To short-circuit the argument, it would make available to single women—I know that widows do not like being called single women, but it is just a form of shorthand—the benefit of relief at 60 instead of 65 so as to bring the age trigger into line with national insurance benefits.

Mr. Cormack: Surely the hon. Gentleman could just call them widows. That is shorter than "single women".

7.45 p.m.

Dr. Gilbert: With respect, this debate covers more than widows. That is why I am using the shorthand. I could read out the list, but I am trying to assist the Committee.
There are considerable difficulties about introducing this feature of social security law into the tax system. When the Royal Commission on Taxation last considered this matter, it recommended against such discrimination.
The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) talked eloquently about the need for special help for women who had been, but are no longer, married. I am very attracted to the idea of what I would call a separate head of household allowance, and what he described as a home owner or house owner allowance, and I have been looking into this for some months. I did not need the hon. Gentleman to stimulate my interest. I make no commitments or prognostications but I assure the hon. Gentleman that we are not oblivious to this consideration. If it were decided that something should be done, nothing is likely to be done quickly because there are great technical difficulties, but I do take the point.
The hon. Member for Staffordshire, South-West said that there was nothing in the Bill for anyone, that it was ungenerous. That might be true of some passages, but one of its main features, which may be repugnant to the Conservatives, gives probably the biggest relief to widows that any Finance Bill has ever given—and gives it, moreover, to that category of widow which is far more represented among the constituents of Conservative Members than among mine. Under the capital transfer tax provisions, there will be no tax at all henceforth on assets passing on death from one spouse to another.
I am very proud to be part of a Government who have done that. That is not an occasion which should attract taxation. When a widow—the same consideration applies to a widower—is suffering great distress, she should not simultaneously have to sell up her home and move immediately into far more modest circumstances than her reduced income would require. We saw no social purpose in that feature of our tax system, which has existed for many years.
I do not wish to compete with Conservative Members in this respect, but when they consider what we have done over widows' pensions, in relation to the investment income surcharge as it relates to single, divorced and separated women, and particularly for the more fortunate widows who will benefit from the capital transfer tax, I hope that they will acquit us of any charge of not being conscious of the difficulties of widows and single-parent families.

Mr. Peter Rees: Of course one takes the Minister's point and recognises what he is trying to do in the capital transfer tax, but he does not appear to have grasped that that relief will help only those women who have not yet been widowed. The relief suggested by these amendments would be gained by those who have already been widowed and would get no relief from estate duty. That is the point that he has signally failed to meet.

Dr. Gilbert: I am grateful to the hon. and learned Gentleman, who always makes perceptive interventions. I do not think that he is technically quite right

that no woman who has not yet been widowed will benefit from the capital transfer tax provisions. In this respect, as far as widows are concerned, I think that he will find—I speak from memory—that the technicalities of the clause go back to Budget Day last year. But I take his point.
As I have made quite clear throughout my remarks this evening, we wish that we could do more. We have sought to proceed along the line I have indicated. All hon. Members can say that they wish that one could do more, and one would agree with that. But we have done a lot. I regret that I have to advise my hon. Friends to resist these amendments, but I assure the House that it is out of no lack of sympathy whatever for the difficult circumstances of widows or any of those responsible for raising children unaided.

Question put, That the amendment be made:—

The Committee proceeded to Division—

Mr. John Wells: (seated and covered): On a point of order, Sir Myer. I have been standing in the Members' Lobby for at least 80 seconds, if not for 120 seconds, with other hon. Members, trying to get into the Division Lobby. There has been a total traffic jam in the Central Lobby, and I and other hon. Members have been endeavouring to get in.

Mr. Andrew Bowden: (seated and covered): Further to that point of order, Sir Myer. I, too, was unable to get through.

The Deputy Chairman: The point of order raised by the hon. Member for Maidstone (Mr. Wells) is one that hardly concerns the Chair. It is remarkable in that we have not got a full Committee voting this evening. This difficulty does not arise when there are probably another hundred-odd Members voting. I can only conclude that for some unreasonable circumstance there was that congestion, but I am afraid that I cannot help the hon. Member.

Mr. F. A. Burden: (seated and covered): Further to that point of order, Sir Myer. While accepting the


problems that it would create for the Chair, may I ask whether it would be possible by some means to ensure a little speeding up, because there were many people standing in the Lobby?

The Deputy Chairman: I assure the hon. Gentleman that I shall take every step to ensure that Members get freedom of access to the Lobby.

Mr. Bowden: (seated and covered): Further to that point of order, Sir Myer. I was unable to get through the door to the Lobby because of hon. Members in front of me. There was no question of dawdling. I just could not get through.

8.0 p.m.

The Deputy Chairman: I do not know how far the Chair can deal with that point. It seems to me that if the hon. Member raised the matter with the 1922 Committee he might be able to get a satisfactory answer. I will certainly look into the question of congestion in the Lobby itself.

Mr. J. Enoch Powell: (seated and covered): Is it not an

established point of order, Sir Myer—[Interruption.]

The Deputy Chairman: Order. I appeal to hon. Members to give me an opportunity to hear this point of order.

Mr. Powell: (seated and covered): Is it not an established point of order, Sir Myer, that an hon. Member is not seated and covered for the purpose of raising a point of order during a Division if his head is covered merely by an Order Paper or some similar article?

The Deputy Chairman: I agree that he should be covered with a hat. Had the hon. Member for Brighton, Kemptown (Mr. Bowden) covered his head with an ordinary newspaper I think I would have ruled him out of order. His head seems to have been covered by a piece of cardboard. I dare say the right hon. Member for Down, South (Mr. Powell) is quite right and that the hon. Member should have been covered with a hat.

The Committee divided: Ayes 248, Noes 267.

Division No. 54.]
AYES
[7.50 p.m.


Adley, Robert
Corrie, John
Gorst, John


Aitken, Jonathan
Costain, A. P.
Gow, Ian (Eastbourne)


Alison, Michael
Crawford, Douglas
Gower, Sir Raymond (Barry)


Arnold, Tom
Critchley, Julian
Grant, Anthony (Harrow C)


Atkins, Rt Hon H. (Spelthorne)
Crouch, David
Gray Hamish


Awdry, Daniel
Crowder, F. P.
Grieve, Percy


Bain, Mrs Margaret
Dean, Paul (N Somerset)
Grimond, Rt Hon J.


Baker, Kenneth
Dodsworth, Geoffrey
Grist, Ian


Banks, Robert
Douglas-Hamilton, Lord James
Grylls, Michael


Bell, Ronald
Drayson, Burnaby
Hall, Sir John


Bennett, Dr Reginald (Fareham)
du Cann, Rt Hon Edward
Hall-Davis, A. G. F.


Benyon, W.
Durant, Tony
Hamilton, Michael (Salisbury)


Berry, Hon Anthony
Dykes, Hugh
Hannam, John


Biffen, John
Eden, Rt Hon Sir John
Harvie Anderson, Rt Hon Miss


Biggs-Davison, John
Edwards, Nicholas (Pembroke)
Havers, Sir Michael


Blaker, Peter
Elliott, Sir William
Hawkins, Paul


Body, Richard
Emery, Peter
Hayhoe, Barney


Boscawen, Hon Robert
Evans, Gwynfor (Carmarthen)
Henderson, Douglas


Boyson, Dr Rhodes (Brent)
Ewing, Mrs Winifred (Moray)
Hicks, Robert


Braine, Sir Bernard
Eyre, Reginald
Higgins, Terence L.


Brittan, Leon
Fairgrieve, Russell
Hooson, Emlyn


Brotherton, Michael
Farr, John
Hordern, Peter


Brown, Sir Edward (Bath)
Fell, Anthony
Howe, Rt Hon Sir Geoffrey


Bryan, Sir Paul
Finsberg, Geoffrey
Howell, David (Guildford)


Buchanan-Smith, Alick
Fisher, Sir Nigel
Howells, Geraint (Cardigan)


Buck, Antony
Fletcher, Alex (Edinburgh N)
Hunt, John


Budgen, Nick
Fookes, Miss Janet
Hurd, Douglas


Bulmer, Esmond
Fowler, Norman (Sutton C'f'd)
Hutchison, Michael Clark


Carlisle, Mark
Fox, Marcus
Irving, Charles (Cheltenham)


Carr, Rt Hon Robert
Fraser, Rt Hon H. (Stafford &amp; St)
James, David


Chalker, Mrs Lynda
Freud, Clement
Jenkin, Rt Hon P. (Wanst'd &amp; W'df'd)


Channon, Paul
Galbraith, Hon. T. G. D.
Johnson Smith, G. (E Grinstead)


Churchill, W. S.
Gardiner, George (Reigate)
Joseph, Rt Hon Sir Keith


Clark, Alan (Plymouth, Sutton)
Gardner, Edward (S Fylde)
Kaberry, Sir Donald


Clark, William (Croydon S)
Gilmour, Rt Hon Ian (Chesham)
Kellett-Bowman, Mrs Elaine


Clarke, Kenneth (Rushcliffe)
Gilmour, Sir John (East Fife)
Kershaw, Anthony


Cockcroft, John
Glyn, Dr Alan
Kilfedder, James


Cooke, Robert (Bristol W)
Godber, Rt Hon Joseph
Kimball, Marcus


Cope, John
Goodhew, Victor
King, Evelyn (South Dorset)


Cormack, Patrick
Goodlad, Alastair
King, Tom (Bridgwater)




Kitson, Sir Timothy
Nelson, Anthony
Speed, Keith


Knight, Mrs Jill
Neubert, Michael
Spence, John


Knox, David
Newton, Tony
Spicer, Jim (W Dorset)


Lamont, Norman
Nott, John
Spicer, Michael (S Worcester)


Lane, David
Onslow, Cranley
Sproat, Iain


Latham, Michael (Melton)
Oppenheim, Mrs Sally
Stainton, Keith


Lawrence, Ivan
Osborn, John
Stanbrook, Ivor


Lawson, Nigel
Page, Rt Hon R. Graham (Crosby)
Stanley, John


Le Marchant, Spencer
Page, John (Harrow West)
Steel, David (Roxburgh)


Lester, Jim (Beeston)
Parkinson, Cecil
Steen, Anthony (Wavertree)


Lewis, Kenneth (Rutland)
Pattie, Geoffrey
Stewart, Donald (Western Isles)


Lloyd, Ian
Peyton, Rt Hon John
Stewart, Ian (Hitchin)


Loveridge, John
Pink, R. Bonner
Stokes, John


Luce, Richard
Price, David (Eastleigh)
Stradling Thomas, J.


MacCormick, Iain
Prior, Rt Hon James
Taylor, R. (Croydon NW)


McCrindle, Robert
Pym, Rt Hon Francis
Taylor, Teddy (Cathcart)


Macfarlane, Neil
Raison, Timothy
Tebbit, Norman


MacGregor, John
Ralhbone, Tim
Thatcher, Rt Hon Margaret


Macmillan, Rt Hon M. (Farnham)
Rees, Peter (Dover &amp; Deal)
Thomas, Dafydd (Merioneth)


McNair-Wilson, M. (Newbury)
Rees-Davies, W. R.
Thomas, Rt Hon P. (Hendon S)


McNair-Wilson, P. (New Forest)
Reid, George
Thompson, George


Madel, David
Renton, Rt Hon Sir D. (Hunts)
Townsend, Cyril D.


Marshall, Michael (Arundel)
Renton, Tim (Mid-Sussex)
van Straubenzee, W. R.


Marten, Neil
Rhys Williams, Sir Brandon
Vaughan, Dr Gerard


Mates, Michael
Ridley, Hon Nicholas
Viggers, Peter


Mather, Carol
Ridsdale, Julian
Wainwright, Richard (Colne V)


Maude, Angus
Rifkind, Malcolm
Wakeham, John


Mawby, Ray
Roberts, Michael (Cardiff NW)
Walder, David (Clitheroe)


Maxwell-Hyslop, Robin
Roberts, Wyn (Conway)
Walker, Rt Hon P. (Worcester)


Mayhew, Patrick
Rodgers, Sir John (Sevenoaks)
Walters, Dennis


Meyer, Sir Anthony
Rossi Hugh (Hornsey)
Warren, Kenneth


Miller, Hal (Bromsgrove)
Rost, Peter (SE Derbyshire)
Watt, Hamish


Mills, Peter
Royle, Sir Anthony
Weatherill, Bernard


Mitchell, David (Basingstoke)
Sainsbury, Tim
Welsh, Andrew


Moate, Roger
Scott, Nicholas
Wiggin, Jerry


Monro, Hector
Shaw, Giles (Pudsey)
Wigley, Dafydd


Montgomery, Fergus
Shelton, William (Streatham)
Wilson, Gordon (Dundee E)


Moore, John (Croydon C)
Shepherd, Colin
Winterton, Nicholas


More, Jasper (Ludlow)
Shersby, Michael
Young, Sir G. (Ealing, Acton)


Morgan-Giles, Rear-Admiral
Silvester, Fred
Younger, Hon George


Morris, Michael (Northampton S)
Sims, Roger



Morrison, Charles (Devizes)
Sinclair, Sir George
TELLERS FOR THE AYES:


Morrison, Peter (Chester)
Skeet, T. H. H.
Mr. John Pardoe and


Neave, Airey
Smith, Dudley (Warwick)
Mr. Cyril Smith.




NOES


Allaun, Frank
Cohen, Stanley
Evans, John (Newton)


Archer, Peter
Coleman, Donald
Ewing, Harry (Stirling)


Armstrong, Ernest
Colquhoun, Mrs Maureen
Faulds, Andrew


Ashton, Joe
Concannon, J. D.
Fernyhough, Rt Hon E.


Atkins, Ronald (Preston N)
Cook, Robin F. (Edin C)
Fitt, Gerard (Belfast W)


Atkinson, Norman
Cox, Thomas (Tooting)
Flanneiy, Martin


Bagier, Gordon A. T.
Craigen, J. M. (Maryhill)
Fletcher, Raymond (Ilkeston)


Barnett, Guy (Greenwich)
Cronin, John
Fletcher, Ted (Darlington)


Barnett, Rt Hon Joel
Crosland, Rt Hon Anthony
Foot, Rt Hon Michael


Bates, Alf
Cryer, Bob
Ford, Ben


Bean, R. E.
Cunningham, Dr J. (Whiteh)
Forrester, John


Bennett, Andrew (Stockport N)
Dalyell, Tam
Fowler, Gerald (The Wrekin)


Bidwell, Sydney
Davidson, Arthur
Fraser, John (Lambeth, N'w'd)


Bishop, E. S.
Davies, Bryan (Enfield N)
Garrett, John (Norwich S)


Blenkinsop, Arthur
Davies, Denzil (Llanelli)
Garrett, W. E. (Wallsend)


Boardman, H.
Davies, Ifor (Gower)
George, Bruce


Booth, Albert
Davis, Clinton (Hackney C)
Gilbert, Dr John


Bottomley, Rt Hon Arthur
Deakins, Eric
Ginsburg David


Boyden, James (Bish Auck)
de Freitas, Rt Hon Sir Geoffrey
Golding, John


Bradley, Tom
Delargy, Hugh
Gould, Bryan


Broughton, Sir Alfred
Dell, Rt Hon Edmund
Gourlay, Harry


Brown, Hugh D. (Provan)
Dempsey, James
Grant, George (Morpeth)


Brown, Robert C. (Newcastle W)
Doig, Peter
Grant, John (Islington C)


Buchan, Norman
Dormand, J. D.
Grocott, Bruce


Buchanan, Richard
Douglas-Mann, Bruce
Hamilton, James (Bothwell)


Butler, Mrs Joyce (Wood Green)
Duffy, A. E. P.
Hamilton, W. W. (Central Fife)


Callaghan, Jim (Middleton &amp; P)
Dunn, James A.
Hamling, William


Campbell, Ian
Dunnett, Jack
Hardy, Peter


Canavan, Dennis
Dunwoody, Mrs Gwyneth
Harper Joseph


Cant, R. B.
Eadie, Alex
Harrison, Walter (Wakefield)


Carmichael, Neil
Edelman, Maurice
Hattersley, Rt Hon Roy


Carter, Ray
Edge, Geoff
Hatton, Frank


Carter-Jones, Lewis
Edwards, Robert (Wolv SE)
Hayman, Mrs Helene


Cartwright, John
Ellis, Tom (Wrexham)
Heffer, Eric S.


Castle, Rt Hon Barbara
English, Michael
Hooley, Frank


Clemitson, Ivor
Ennals, David
Horam, John


Cocks, Michael (Bristol S)
Evans, Ioan (Aberdare)
Hoyle, Douglas (Nelson)







Huckfield, Les
Mendelson, John
Shaw, Arnold (Ilford South)


Hughes, Rt Hon C. (Anglesey)
Mikardo, Ian
Sheldon, Robert (Ashton-u-Lyne)


Hughes, Mark (Durham)
Millan, Bruce
Silkin, Rt Hon John (Deptford)


Hughes, Robert (Aberdeen N)
Miller, Dr M. S. (E Kilbride)
Silverman, Julius


Hughes, Roy (Newport)
Miller, Mrs Millie (Ilford N)
Small, William


Hunter, Adam
Mitchell, R. C. (Soton, Itchen)
Smith, John (N Lanarkshire)


Irvine, Rt Hon Sir A. (Edge Hill)
Molloy, William
Snape, Peter


Jackson, Miss Margaret (Lincoln)
Moonman, Eric
Spearing, Nigel


Janner Greville
Morris, Alfred (Wythenshawe)
Spriggs, Leslie


Jay, Rt Hon Douglas
Morris, Charles R. (Openshaw)
Stallard, A. W.


Jeger, Mrs Lena
Morris, Rt Hon J. (Aberavon)
Stewart, Rt Hn M. (Fulham)


Jenkins, Hugh (Putney)
Mulley, Rt Hon Frederick
Stoddart, David


John, Brynmor
Murray, Ronald King
Stott, Roger


Johnson, James (Hull West)
Newens, Stanley
Strang, Gavin


Johnson, Walter (Derby S)
Noble, Mike
Swain, Thomas


Jones, Alec (Rhondda)
Oakes, Gordon
Taylor, Mrs Ann (Bolton W)


Jones, Barry (East Flint)
Ogden, Eric
Thomas, Jeffrey (Abertillery)


Jones, Dan (Burnley)
O'Malley, Rt Hon Brian
Thomas, Ron (Bristol NW)


Judd, Frank
Orbach, Maurice
Thorne, Stan (Preston South)


Kaufman, Gerald
Ovenden, John
Tierney, Sydney


Kelley, Richard
Owen, Dr David
Tinn, James


Kerr, Russell
Padley, Walter
Tomlinson, John


Kilroy-Silk, Robert
Palmer, Arthur
Torney, Tom


Kinnock Neil
Park, George
Tuck, Raphael


Lambie, David
Parker, John
Urwin, T. W.


Lamborn, Harry
Parry, Robert
Wainwright, Edwin (Dearne V)


Lamond, James
Pavitt, Laurie
Walden, Brian (B'ham, L'dyw'd)


Leadbitter, Ted
Peart, Rt Hon Fred
Walker, Harold (Doncaster)


Lee, John
Pendry, Tom
Walker, Terry (Kingswood)


Lestor, Miss Joan (Eton &amp; Slough)
Perry, Ernest
Watkins, David


Lewis, Arthur (Newham N)
Phipps, Dr Colin
Watkinson, John


Lewis, Ron (Carlisle)
Prentice, Rt Hon Reg
Weetch, Ken


Lipton, Marcus
Prescott, John
Weitzman, David


Litterick, Tom
Price, C. (Lewisham W)
Wellbeloved, James


Loyden, Eddie
Price, William (Rugby)
White, Frank R. (Bury)


Luard, Evan
Radice, Giles
White, James (Pollok)


Lyon, Alexander (York)
Rees, Rt Hon Merlyn (Leeds S)
Willey, Rt Hon Frederick


Lyons, Edward (Bradford W)
Richardson, Miss Jo
Williams, Alan (Swansea W)


Mabon, Dr J. Dickson
Roberts, Albert (Normanton)
Williams, Alan Lee (Hornch'ch)


McCartney, Hugh
Roberts, Gwilym (Cannock)
Wlliams, Rt Hon Shirley (Hertford)


McElhone, Frank
Robertson, John (Paisley)
Williams, W. T. (Warrington)


MacFarquhar, Roderick
Roderick, Caerwyn
Wilson, Alexander (Hamilton)


Mackenzie, Gregor
Rodgers, George (Chorley)
Wilson, Rt Hon H. (Huyton)


McMillan, Tom (Glasgow C)
Rodgers, William (Stockton)
Wilson, William (Coventry SE)


Madden, Max
Rooker, J. W.
Wise, Mrs Audrey


Magee, Bryan
Roper, John
Woodall, Alec


Mahon, Simon
Rose, Paul B.
Woof, Robert


Marks, Kenneth
Ross, Rt Hon W. (Kilmarnock)
Wrigglesworth, Ian


Marquand, David
Rowlands, Ted
Young, David (Bolton E)


Marshall, Dr Edmund (Goole)
Ryman, John



Marshall, Jim (Leicester S)
Sandelson, Neville
TELLERS FOR THE NOES:


Mason, Rt Hon Roy
Sedgemore, Brian
Miss Betty Boothroyd and


Meacher, Michael
Selby, Harry
Mr. John Ellis.


Mellish, Rt Hon Robert

Question accordingly negatived.

[Mr. BRYANT GODMAN IRVINE in the Chair]

Sir John Hall: I beg to move Amendment No. 4, in page 4, line 1, after 'more', insert'
'or
(ii) he is a disabled person or a registered blind person; and for the purposes of this section a disabled person shall be an individual who suffers at any time in the year of assessment from any physical or mental handicap as a result of any injury or the medical administration of drugs of any kind or has been physically or mentally handicapped since birth and a registered blind person means a person registered as a blind person in a register compiled under section 29 of the National Assistance Act 1948 or under any corresponding enactment

for the time being in force in Northern Ireland'.
The purpose of this amendment is perfectly clear. It is to give relief to disabled persons and registered blind persons. I agree that the wording may be faulty. The definition of a registered blind person is already used in the Income Tax Acts, following the additional personal allowances which were granted in 1970, but I have searched in vain for a generally and commonly acceptable definition of a blind person, and in consequence of my failure to find such a definition I have had to invent one. This definition which appears in the amendment has been drawn widely enough to include children affected directly or indirectly by drugs such as thalidomide.
The Committee, I think, will agree that this is a very modest amendment. In fact, considering the kind of cases to which it could apply, many hon. Members, perhaps on both sides of the Committee, might think it far too modest. Hon. Members have only to think of the many sad cases of which they know in their own constituencies—those who from birth or from later injury have suffered illness and disablement, are blind or are so totally disabled physically or mentally as to be incapable of making any real contribution towards earning their own livelihood. They include spastics, the mentally retarded, people suffering from muscular dystrophy and others suffering from many crippling and disabling diseases of which we all have knowledge in our work as Members of Parliament in our constituencies and elsewhere.
This amendment will help those who have received, for example, heavy damages because of serious injury sustained as a result of a road accident or an industrial accident. It will help those who are now, or may be at some time later, through their parents' estate, living on an investment income, and all of whom could live in their own homes and not be a total charge on the State whilst their net incomes permit. This is an important point. We all know the pressure on the limited number of homes throughout the county, most of which are run by local authorities, to cater for the really seriously disabled. We surely ought to do everything we can to encourage people suffering from those conditions to continue living in their own homes.
I think the easiest way to deal with this matter is to quote some examples, which I take mainly from my own constituency, of the kind of cases which I have in mind. There is in my constituency a man aged 45, married with two young children, who not long ago sustained a very serious accident as a result of which he was completely paralysed. He is unable to move. He has to be lifted around. He was awarded substantial damages which invested give him an income which enables him to hire medical help to supplement the nursing which is already given to him by his wife. His wife cannot go out to work, for two reasons. First she has two young children; and second, she has to do a

good deal of the nursing which her husband requires. They are managing to keep going in their own home on this income, but only by the most careful budgeting.
They were very relieved when this relief of taxation was first introduced, although they have seen it being eaten away month by month by rapidly growing inflation, but they thought that this year at least they would be able to coninue, having found, as a result of the debates in this House on the last Finance Bill, that the concession as it had been granted originally was to be continued. Now, as a result of the proposals before us, if this amendment is not accepted, they will find themselves in a much more difficult position.
The second case is that of a spastic child now 14 or 15 years of age. The parents are denying themselves every little luxury in order to build up in their lifetime some capital sum which they can leave behind them and which, after payment of the appropriate duty, will leave an income which will ensure that the spastic child can be cared for, not in a State home but in a home of their own choosing and with people who they will be certain will look after the child.
The third case is that of a professional woman, a brilliant woman in her day, who is now so crippled at the age of 50 with rheumatoid arthritis that she cannot work. She is living on an investment income which was built up in very small part from inherited money but largely by savings which she accumulated as a result of her professional skills until she could no longer go on working. This income has been rapidly eaten into because of inflation. She feels that this proposed change in the Finance Bill is really the last straw.
Not very much money is involved in this, but when someone is budgeting to the last penny everything counts, and when someone is desperately struggling to keep going in the most appalling physical conditions, of which the Under-Secretary of State for Health and Social Security, who, I am glad to see, is present, is as well aware as anyone, these blows, small though they may be, seem to be the last straw. In some cases they seem to take away the will to continue or the will to live.
Clause 5 unamended will increase the burden of tax on these people. It will deliberately impose another handicap on lives which are already almost totally handicapped, and with inflation at the same time rapidly destroying the modest incomes people like this possess. When I recall the fervent speeches by Labour Members urging repeatedly that greater help should be given to the disabled at all times, when I recall the work of the Under-Secretary in these matters and the considerable work of the hon. Member for Stoke-on-Trent, South (Mr. Ashley) I feel sure that the Chief Secretary will feel prepared to accept the effect of the amendment if not its form. I would be the first to agree that it might be defective in its definition of a disabled person.
No one can deny that disabled people of this kind, too handicapped to look after themselves and requiring constant attention, unable to make any real contribution to their own earnings, should not have to suffer this additional impost because of some abstract political theory of the Government about how investment income should be treated. I am certain that I am not appealing in vain to the Chief Secretary to exercise compassion here.
I have been unable to cost the proposal. It is difficult to cost, but I cannot believe that it will be a great sum. Although it is a modest amount, if the Chief Secretary were to make a concession here it would make a big difference to people whose lives do not have a great deal of sunshine or a great deal of hope.

Sir David Renton: I must disclose strong personal reasons for hoping that this amendment, or something like it, will be accepted. I disclosed to the House some years ago that the youngest of my three daughters was severely handicapped, mentally and physically. She cannot feed herself, undress or dress herself, and she can walk only if she is supported. She would not know whether she were in a State home or a charitable foundation, where she is, apart from holiday times when we have her at home.
Naturally this is a problem that vie have learned to live with, but I felt it right, several years ago, to make some kind of permanent provision for her. I

need not go into all the motives, but I hope that the House will accept that they were worthy. I provided an income from a settlement that I made and that income would exceed the amount with which we are concerned in the amendment. The charitable foundation gets that income. It is not essentially a private home, because a large proportion of the young people there—children and adults—are sent by local authorities, who pay for them. No local authority has to pay for our child.
It came as a real blow to know that we were going to have to pay 15 per cent. or 10 per cent., whatever it is, as a surcharge on the provision we had made—a fairly modest provision, since I am neither a poor man nor a rich man—for our daughter. It was in the interests of her sisters that I thought it right to make this provision for my daughter, so that she would not be a burden when her parents were gone. I felt it was in my youngest daughter's interest and in the interest of the charity concerned. It so happens that it must also be in the public interest—and that stands to reason.
I do not want to labour an essentially personal matters. The example that I have given could be multiplied many times over the country. I speak from experience, as one who is connected with the National Society for Mentally Handicapped Children. All I can say is that I hope that the amendment that my hon. Friend the Member for Wycombe (Sir J. Hall) has moved so clearly and vividly will not be resisted, and that in the spirit of compassion which is possible on both sides of this Committee the amendment will receive a favourable reception from the Treasury bench.

8.15 p.m.

Mr. Robert Boscawen: My hon. Friend the Member for Wycombe (Sir J. Hall) and my right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton) have made moving and eloquent speeches in favour of this modest amendment. The amendment comes against a background of the State's provision for the severely disabled being hopelessly inadequate. If the background had been other than that and the State had been able to provide substantially for all the very severely disabled people one might take a different view of


the amendment, but that is not the case. That is all the more reason, therefore, why the State should give encouragement and support, where funds are available, to help the severely disabled.
I fully realise that the vast number of severely disabled people are not able to get help from an invested sum, whether that sum is in the form of damages, a grant, or something from parents. We have seen how the Labour Party has been able to provide only a small amount of money for the very severely handicapped who have never been able to work and build up a contribution to State benefits. It is a miserable and derisory sum of only £11 million. When my party was in Government we were able to do no better, and the programme we put forward at the last election was better than what has been offered now, but not all that much better.
So the background to the amendment is that the State is not able to help a great deal. It can offer practically nothing towards the cost of specialist education that is needed by severely disabled children who can respond to it. I know this very well, because in my constituency there is a remarkable experiment in the education of handicapped young people. I see and know how costly this is and I see the parents who, without help in many cases, struggle to find money to pay for the education of their children. Anything we can do to help, even though it may only be help for a small number, should be done.
The more we can do to help the severely disabled to stay in their own homes, the more we save the cost to the State. This is a vitally important matter, and it is even more important to keep them in their own homes, because that means keeping the family together. My right hon. and learned Friend explained how his own child had to go into residential care for part of the year.
This issue should not divide the Committee. Where funds are available to help severely handicapped people, we should make the best use of them. We should not tax, at a surcharge rate, income that those people receive as a result of settlements. The amendment does not even go so far as to say that; it merely raises the threshold by £500 and brings in a smaller sum.
Those who have become severely disabled through an accident or illness, having built up State benefit contributions throughout their working life, will be drawing about £1,000 a year under the State provisions, if they are married and have one or two children. They will receive that sum through the attendance allowance and the other benefits available to them. That is not taxed. But other people who have not been able to work, probably because they have a congenital handicap, will never be able to receive the attendance allowance at that rate. Under the Bill we are discussing in Committee upstairs they will receive £6·90 a week, which is not even disregarded for supplementary benefit. Therefore the sum in the Bill, which raises the thresh-hold only from £1,000 to £1,500, is miserable. It is little more than the State is providing to those who have been fortunate enough to build up contributions for the State benefit.
The Chief Secretary should carefully consider this modest amendment and, even if its wording is not quite correct, find a way to accept its intention.

Mr. Joel Barnett: Nobody could have failed to be moved by the way in which the hon. Member for Wycombe (Sir J. Hall) opened the debate and then by the other speeches, particularly that of the right hon. and learned Member for Huntingdonshire (Sir D. Renton). We all know of his personal problem, and it is moving to hear of it. The people concerned are those who evoke the greatest sympathy from us all. In that sense, it is nothing like a political issue.
The hon. Member for Wycombe was right to say that it is impossible to estimate what would be the cost of the amendment, because there is no information about the distribution of investment income among the disabled and the blind. In any case, I shall not rest my arguments on the cost.
Similar amendments relating to the disabled have been moved for many years by hon. Members on both sides—[Interruption.]—I could quote speeches by Treasury Ministers in the Government of the right hon. Lady's party, but I do not think that that is appropriate. Amendments relating to the disabled have been answered by Treasury Ministers of successive Governments.

Mrs. Thatcher: What the Chief Secretary is doing in the Bill is wilfully to make the situation worse for this group of disabled people.

Mr. Barnett: I was trying to make the point that tax concessions and relief for disabled people have been debated and answered by successive Governments over many years.
My reply has nothing to do with abstract theory. Nobody can feel happy about having to say that he cannot accept the amendment, which I have to do. There are practical problems. The Opposition have tried hard to meet them in their definitions. I regret to say that, through no fault of their own, it was not possible to do so. The definition is much too wide. I am advised that any individual could claim, even if he had suffered an injury through drugs, or had a sprained wrist or ankle, instead of suffering a serious handicap. Any minor mishap would qualify under the amendment.
The test is much too broad. To refine it would involve all the problems of medical assessment, which it would be almost impossible to impose on the Inland Revenue.

Mr. Boscawen: Does not the right hon. Gentleman agree that the Government already have a mechanism for defining the severely disabled, in the attendance allowance, and will shortly have another one, in the non-contributory invalidity pension? Both cover well-defined small groups of people. Perhaps another amendment could be introduced on Report which would confine the benefits of the amendment to them.

Mr. Barnett: I could always introduce another amendment on Report, but I am advised that those definitions would not cover everybody who should be covered, or would include some who should not be included.
The question of the blind is very different, but the amendment would help only those blind people who happened to have investment income of more than £1,000 a year. It would do nothing to help those who have no investment income, or have investment income of less than £1,000 a year.
Apart from that, there is a serious objection on grounds of principle relating to the tax system. I supported the whole

idea of unification introduced by the Conservative Government. I seem to recall having suggested something similar many years previously. I support the system, which was to ensure that the function of graduation in the tax system would be dealt with not against investment income but against income generally, in the normal way, thus benefiting the taxpayer whether or not he had investment income. That is the general principle behind unification.
Therefore, the amendment is the wrong way to help the type of individual concerned. One could think of many categories that one would want to help. The Opposition have tabled amendments dealing with a number of different categories of people whom they seek to help. One can think of many more, but then there would be a duplication of allowances against investment income and against income generally. We would then duplicate the complications that we always have in relation to income generally. That was not what was intended, and that was not the understanding when unification was introduced.
When all that is said, there is the major argument whether the amendment is the appropriate way in which to give assistance to this category of person. There are serious objections against tax reliefs for investment income. I take the point of the right hon. and learned Member for Huntingdonshire that we are not talking very often about wealthy people. I venture to doubt whether tax relief is the best way to help the kind of person that we are discussing.
The amendment seeks to help not all those people with investment income who are disabled but those disabled persons who have an investment income in excess of £1,000 a year. For the reasons that I have set out, the tax system is not the best way of helping the disabled. Successive Governments have had to resist reliefs because of the definition problem. When we consider giving reliefs against ordinary tax—this has nothing to do with investment income—the same arguments apply. For the reasons that I have given, they apply even more to investment income.
The real way out of this difficulty is to help with grants of various kinds. They help the people who have no investment


income. I take the point that what successive Governments have been able to do in that direction has been inadequate. I am sure that my hon. Friend the Under-Secretary of State for Health and Social Security, who has responsibility for the disabled, would love to do even more. There is always the question of priorities. As Chief Secretary, I am particularly concerned with priorities and in deciding how much can be spared at a given time. Despite that, we have increased the attendance allowance, we have a new invalidity care allowance, a new noncontributory invalidity pension, and an improved mobility allowance. I hasten to add that none of them provide as much as we would like to offer, but that is surely the best way in which to help.
That argument has always been the one put forward by previous Governments. I regret to have to say that it is right. It is with regret that I have to say that I cannot accept the amendment. I hope that the right hon. Member for Finchley (Mrs. Thatcher) and her hon. Friends will feel that for the reasons I have given it will not be necessary to press the amendment.

Mr. David Howell: Having listened to the Chief Secretary, I am left overwhelmingly with the impression that the Government do not understand what they are doing. Many of the right hon. Gentleman's arguments seem to come out of past briefs used by Treasury Ministers. Tonight they have been addressed to a different situation. We are not arguing for additional relief for a certain group; we are asking that the Government desist in their determination to put an additional burden on the group of people that we are discussing. That is the language in which this matter should be discussed.
The Chief Secretary talks about the amendment's seeking to introduce the wrong method of giving assistance. We say that this is the wrong group to lay an additional burden upon. It is the wrong group from whom to take away assistance. The right hon. Gentleman is turning the argument upside down. He talks about definitions not existing. I do not know what his hon. Friend the Under-Secretary of State for Health and

Social Security would say on that. Adequate definitions have been put forward.
The right hon. Gentleman says that he is advised that what is contained in the amendment does not add up, but his arguments are not addressed to the issue that we are debating. We ask the Government at this stage not to put an additional tax impost on disabled people who have an investment income. It is an absurd argument to suggest that for the Government to decide very generously not to put a burden on them would benefit only those with an investment income. That is Alice in Wonderland talk. Only those with investment income are about to be hit by the additional impost that the Government are now retrospectively putting upon them. To say that the Government cannot accept the amendment because only people with investment income would benefit is an absurdity. That is a merry-go-round argument, which contains the circular twist not to face up to a situation which the right hon. Gentleman seems determined to avoid.
I do not believe that the Minister or those who wrote his brief understand what the Government are doing. They are putting an unnecessary and additional burden upon a group of people who, if their income is taken away by taxation and extra costs, will probably run into additional difficulties. That will involve extra costs being put upon the State. I know that that is the philosophy of the Labour Party. It seems that it does not like things being done through the tax system. It wants them to be done through the social security system. It is prepared, in this kind of situation, to go to these lengths, which seem to us to be quite undue, without any feeling of generosity. It is prepared to go to such lengths in the name of its determination to pursue what has been described as a vindictive and additional tax burden laid on a group of people who can least afford to carry it.
The Chief Secretary knows what he is doing when, for 1974, he proposes to lay this additional retrospective burden upon these people. My right hon. and hon. Friends believe that this is the right moment to press this amendment vigorously to a vote, and that it what we now propose to do.

Sir D. Renton: I listened very carefully to the Chief Secretary. However, even were I not involved in the way I have described, I would find three faults in the reply that we have heard.
First, the argument with regard to definition is a very poor one. The cases that the amendment covers are clear enough. However, even though the wording of the amendment leaves something to be desired, parliamentary counsel will have no difficulty in tightening the terms of the amendment, as has to be done so often. Parliamentary counsel have had to oblige Governments and the House time and again in drawing up amendments more tightly. Sometimes I think we ask too much of parliamentary counsel. However, on this occasion I do not think it would be asking too much. I do not think that the drafting point is a good one.
The second fault is that the Chief Secretary relied upon an argument that this is a familiar situation. Never before have we had before the Committee a proposal of this kind for a surcharge upon incomes. Therefore we are faced with an entirely fresh situation—a point overlooked by the Chief Secretary when he made this argument, based on a lengthy precedent as to how the Treasury dealt with matters of hardship.
The third fault in the right hon. Gentleman's reply has a broader economic implication. This Government are making it clear that they do not want or expect people to save and make provision for themselves and their families. They would rather that people either spent their money or had it taxed, so that the gentlemen in Whitehall might decide how provision could best be made. In a free society, I do not consider that this is a sensible or proper attitude. Moreover,

it is an inflationary attitude, because it involves the Government in greater expenditure than necessary at a time when it is accepted that the Government should reduce expenditure and encourage people to take steps which will enable the Government to reduce expenditure. Therefore, on broad economic grounds, that argument and that attitude seem to be contrary to the public interest.

In spite of what the Chief Secretary said, I hope he will think yet again about this matter, whether we vote on it or not, and reintroduce it on Report.

Although I was never one myself, I know the difficulty that Treasury Ministers are always in. Having held their conferences inside the Treasury, and having decided to take a step, they must not, without further consultation, grant a concession once it has been decided that no concession shall be granted. But that does not stop them from going back to the Treasury and having yet another thought. I hope that that is what will happen on this occasion.

Mr. Boscawen: I intervene briefly to raise one small matter which the Chief Secretary does not seem to have appreciated, namely, that many of the people whom we are discussing have only investment income and cannot obtain any other form of income because they are incapable of working. Although some may receive very small incomes from non-contributory invalidity pensions, without their investment incomes they will have to rely upon means-tested supplementary benefit.

Question put, That the amendment be made:—

The Committee divided: Ayes 255, Noes 270.

Division No. 55.]
AYES
[8.43 p.m.


Adley, Robert
Biggs-Davison, John
Carlisle, Mark


Aitken, Jonathan
Blaker, Peter
Carr, Rt Hon Robert


Alison, Michael
Body, Richard
Chalker, Mrs Lynda


Amery, Rt Hon Julian
Boscawen, Hon Robert
Channon, Paul


Arnold, Tom
Bowden, A. (Brighton Kemptown)
Churchill, W. S.


Atkins, Rt Hon H. (Spelthorne)
Boyson, Dr Rhodes (Brent)
Clark, Alan (Plymouth, Sutton)


Awdry, Daniel
Braine, Sir Bernard
Clark, William (Croydon S)


Bain, Mrs Margaret
Brittan, Leon
Clarke, Kenneth (Rushcliffe)


Baker, Kenneth
Brotherton, Michael
Cockcroft, John


Banks, Robert
Brown, Sir Edward (Bath)
Cooke, Robert (Bristol W)


Beith, A. J.
Bryan, Sir Paul
Cope, John


Bell, Ronald
Buchanan-Smith, Alick
Cormack, Patrick


Bennett, Dr Reginald (Fareham)
Buck, Antony
Corrie, John


Benyon, W.
Budgen, Nick
Costain, A. P.


Berry, Hon Anthony
Bulmer, Esmond
Crawford, D.


Biffen, John
Burden, F. A.
Critchley, Julian




Crouch, David
Kershaw, Anthony
Reid, George


Crowder, F. P.
Kilfedder, James
Renton, Rt Hon Sir D. (Hunts)


Dean, Paul (N Somerset)
Kimball, Marcus
Renton, Tim (Mid-Sussex)


Dodsworth, Geoffrey
King, Evelyn (South Dorset)
Rhys Williams, Sir Brandon


Douglas-Hamilton, Lord James
King, Tom (Bridgwater)
Ridley, Hon Nicholas


Drayson, Burnaby
Kitson, Sir Timothy
Ridsdale, Julian


du Cann, Rt Hon Edward
Knight, Mrs Jill
Rifkind, Malcolm


Durant, Tony
Knox, David
Roberts, Michael (Cardiff NW)


Dykes, Hugh
Lamont, Norman
Roberts, Wyn (Conway)


Eden, Rt Hon Sir John
Lane, David
Rodgers, Sir John (Sevenoaks)


Edwards, Nicholas (Pembroke)
Latham, Michael (Melton)
Rossi Hugh (Hornsey)


Elliott, Sir William
Lawrence, Ivan
Rost, Peter (SE Derbyshire)


Emery, Peter
Lawson, Nigel
Royle, Sir Anthony


Evans, Gwynfor (Carmarthen)
Lester, Jim (Beeston)
Sainsbury, Tim


Ewing, Mrs Winifred (Moray)
Lewis, Kenneth (Rutland)
Scott, Nicholas


Eyre, Reginald
Lloyd, Ian
Shaw, Giles (Pudsey)


Fairgrieve, Russell
Loveridge, John
Shelton, William (Streatham)


Farr, John
Luce, Richard
Shepherd, Colin


Fell, Anthony
MacCormick, Iain
Shersby, Michael


Finsberg, Geoffrey
McCrindle, Robert
Silvester, Fred


Fisher Sir Nigel
Macfarlane, Neil
Sims, Roger


Fletcher, Alex (Edinburgh N)
MacGregor, John
Sinclair, Sir George


Fookes, Miss Janet
Macmillan, Rt Hon M. (Farnham)
Skeet, T. H. H.


Fowler, Norman (Sutton C'f'd)
McNair-Wilson, M. (Newbury)
Smith, Cyril (Rochdale)


Fox, Marcus
McNair-Wilson, P. (New Forest)
Smith, Dudley (Warwick)


Fraser, Rt Hon H. (Stafford &amp; St)
Madel, David
Speed, Keith


Freud, Clement
Marshall, Michael (Arundel)
Spence, John


Galbraith, Hon. T. G. D.
Marten, Neil
Spicer, James (W Dorset)


Gardiner, George (Reigate)
Mates, Michael
Spicer, Michael (S Worcester)


Gardner, Edward (S Fylde)
Mather, Carol
Sproat, Iain


Glimour, Rt Hon Ian (Chesham)
Maude, Angus
Stalnton, Keith


Gilmour, Sir John (East Fife)
Mawby, Ray
Stanbrook, Ivor


Glyn, Dr Alan
Maxwell-Hyslop, Robin
Stanley, John


Godber, Rt Hon Joseph
Mayhew, Patrick
Steel, David (Roxburgh)


Goodhart, Philip
Meyer, Sir Anthony
Steen, Anthony (Wavertree)


Goodhew, Victor
Miller, Hal (Bromsgrove)
Stewart, Donald (Western Isles)


Goodlad, Alastair
Mills, Peter
Stewart, Ian (Hitchin)


Gorst, John
Mitchell, David (Basingstoke)
Stokes, John


Gow, Ian (Eastbourne)
Moate, Roger
Stradling Thomas, J.


Gower, Sir Raymond (Barry)
Monro, Hector
Taylor, R. (Croydon NW)


Grant, Anthony (Harrow C)
Montgomery, Fergus
Taylor, Teddy (Cathcart)


Gray, Hamish
Moore, John (Croydon C)
Tebbit, Norman


Grieve, Percy
More, Jasper (Ludlow)
Thatcher, Rt Hon Margaret


Grimond, Rt Hon J.
Morgan-Giles, Rear-Admiral
Thomas, Dafydd (Merioneth)


Grist, Ian
Morris, Michael (N'th'pton S)
Thomas, Rt Hon P. (Hendon S)


Grylls, Michael
Morrison, Charles (Devizes)
Thompson, George


Hall, Sir John
Morrison, Peter (Chester)
Townsend, Cyril D.


Hall-Davis, A. G. F.
Neave, Airey
van Straubenzee, W. R.


Hamilton, Michael (Salisbury)
Nelson, Anthony
Viggers, Peter


Hannam, John
Neubert, Michael
Wainwright, Richard (Colne V)


Harvie Anderson, Rt Hon Miss
Newton, Tony
Wakeham, John


Havers, Sir Michael
Normanton, Tom
Walder, David (Clitheroe)


Hawkins, Paul
Nott, John
Walker Rt Hon P. (Worcester)


Hayhoe, Barney
Onslow, Cranley
Walker-Smith, Rt Hon Sir Derek


Henderson, Douglas
Oppenheim, Mrs Sally
Walters, Dennis


Hicks, Robert
Osborn, John
Warren, Kenneth


Higgins, Terence L.
Page, John (Harrow West)
Watt, Hamish


Hooson, Emlyn
Page, Rt Hon R. Graham (Crosby)
Weatherill, Bernard


Hordern, Peter
Pardoe, John
Wells, John


Howe, Rt Hon Sir Geoffrey
Parkinson, Cecil
Welsh, Andrew


Howell, David (Guildford)
Pattie, Geoffrey
Wiggin, Jerry


Howells, Geraint (Cardigan)
Penhaligon, David
Wigley, Dafydd


Hunt, John
Peyton, Rt Hon John
Wilson, Gordon (Dundee E)


Hurd, Douglas
Pink, R. Bonner
Winterton, Nicholas


Hutchison, Michael Clark
Price, David (Eastleigh)
Young, Sir G. (Ealing, Acton)


Irving, Charles (Cheltenham)
Prior, Rt Hon James
Younger, Hon George


James, David
Pym, Rt Hon Francis



Jenkin, Rt Hon P.
Raison, Timothy
TELLERS FOR THE AYES:


Johnson Smith, G. (E Grinstead)
Rathbone, Tim
Dr. Gerard Vaughan and


Kaberry, Sir Donald
Reea, Peter (Dover &amp; Deal)
Mr. Spencer Le Merchant.


Kellett-Bowman, Mrs Elaine






NOES


Allaun, Frank
Benn, Rt Hon Anthony Wedgwood
Broughton, Sir Alfred


Archer, Peter
Bennett, Andrew (Stockport N)
Brown, Hugh D. (Provan)


Armstong, Ernest
Bidwell, Sydney
Brown, Robert C. (Newcastle W)


Ashton, Joe
Bishop, E. S.
Buchan, Norman


Atkins, Ronald (Preston N)
Blenkinsop, Arthur
Buchanan, Richard


Atkinson, Norman
Boardman, H.
Butler, Mrs Joyce (Wood Green)


Bagier, Gordon A. T.
Boothroyd, Miss Betty
Callaghan, Jim (Middleton &amp; P)


Barnett, Guy (Greenwich)
Bottomley, Rt Hon Arthur
Campbell, Ian


Barnett, Rt Hon Joel
Boyden, James (Bish Auck)
Canavan, Dennis


Bates, Alf
Bradley, Tom
Cant, R. B.







Carmichael, Neil
Huckfield Leslie
Peart, Rt Hon Fred


Carter, Ray
Hughes, Rt Hon C. (Anglesey)
Pendry, Tom


Carter-Jones, Lewis
Hughes, Mark (Durham)
Perry, Ernest


Cartwright, John
Hughes, Robert (Aberdeen N)
Phipps, Dr Colin


Castle, Rt Hon Barbara
Hughes, Roy (Newport)
Prentice, Rt Hon Reg


Clemitson, Ivor
Hunter, Adam
Prescott, John


Cocks, Michael (Bristol S)
Irvine, Rt Hon Sir A. (Edge Hill)
Price, C. (Lewisham W)


Cohen, Stanley
Jackson, Miss Margaret (Lincoln)
Price, William (Rugby)


Coleman, Donald
Janner Greville
Radice, Giles


Colquhoun, Mrs Maureen
Jay, Rt Hon Douglas
Rees, Rt Hon Merlyn (Leeds S)


Concannon, J. D.
Jeger, Mrs Lena (W'st'd &amp; W'df'd)
Richardson, Miss Jo


Cook, Robin F. (Edin C)
Jenkins, Hugh (Putney)
Roberts, Albert (Normanton)


Corbett, Robin
John, Brynmor
Roberts, Gwilym (Cannock)


Cox, Thomas (Tooting)
Johnson, James (Hull West)
Robertson, John (Paisley)


Craigen, J. M. (Merryhill)
Johnson, Walter (Derby S)
Roderick, Caerwyn


Cronin, John
Jones, Alec (Rhondda)
Rodgers, George (Chorley)


Crosland, Rt. Hon Anthony
Jones, Barry (East Flim)
Rodgers, William (Stockton)


Cryer, Bob
Jones, Dan (Burnley)
Rooker, J. W.


Cunningham, Dr J. (Whiteh)
Judd, Frank
Roper, John


Dalyell, Tam
Kaufman, Sir Donald
Rose, Paul B.


Davidson, Arthur
Kelley, Richard
Ross, Rt Hon W. (Kilm'nock)


Davies, Bryan (Enfield N)
Kerr, Russell
Rowlands, Ted


Davies, Denzil (Llanelli)
Kilroy-Silk, Robert
Ryman, John


Davies, Ifor (Gower)
Kinnock Neil
Sandelson, Neville


Davis, Clinton (Hackney C)
Lambie, David
Sedgemore, Brian


Deakins, Eric
Lamborn, Harry
Selby, Harry


de Freitas, Rt Hon Sir Geoffrey
Lamond, James
Shaw, Arnold (Ilford South)


Delargy, Hugh
Leadbitter, Ted
Sheldon, Robert (Ashton-u-Lyne)


Dell, Rt Hon Edmund
Lee, John
Silkin, Rt Hon John (Deptford)


Dempsey, James
Lestor, Miss Joan (Eton &amp; Slough)
Silverman, Julius


Doig, Peter
Lewis, Arthur (Newham N)
Skinner, Dennis


Dormand, J. D.
Lewis, Ron (Carlisle)
Small, William


Douglas-Mann, Bruce
Lipton, Marcus
Smith, John (N Lanarkshire)


Duffy, A. E. P.
Litterick, Tom
Snape, Peter


Dunn, James A.
Loyden, Eddie
Spearing, Nigel


Dunnett, Jack
Luard, Evan
Spriggs, Leslie


Dunwoody, Mrs Gwyneth
Lyon, Alexander (York)
Stallard, A. W.


Eadie, Alex
Lyons, Edward (Bradford W)
Stewart, Rt Hn M. (Fulham)


Edelman, Maurice
Mabon, Dr J. Dickson
Stoddart, David


Edge, Geoff
McCartney, Hugh
Stott, Roger


Edwards, Robert (Wolv SE)
McElhone, Frank
Strang, Gavin


Ellis, John (Brigg &amp; Scun)
MacFarquhar, Roderick
Swain, Thomas


Ellis, Tom (Wrexham)
Mackenzie, Gregor
Taylor, Mrs Ann (Bolton W)


English, Michael
McMillan, Tom (Glasgow C)
Thomas, Jeffrey (Abertillery)


Ennals, David
Madden, Max
Thomas, Ron (Bristol NW)


Evans, Ioan (Aberdare)
Magee, Bryan
Thorpe, Rt Hon Jeremy (N Devon)


Evans, John (Newton)
Mahon, Simon
Tierney, Sydney


Ewing, Harry (Stirling)
Marks, Kenneth
Tinn, Jamas


Faulds, Andrew
Marquand, David
Tomlinson, John


Fernyhough, Rt Hon E.
Marshall, Dr Edmund (Goole)
Torney, Tom


Fitt, Gerard (Belfast W)
Marshall, Jim (Leicester, S.)
Urwin, T. W.


Flannery, Martin
Mason, Rt Hon Roy
Variey, Rt Hon Eric G.


Fletcher, Raymond (Ilkeston)
Meacher, Michael
Wainwright, Edwin (Dearne V)


Fletcher, Ted (Darlington)
Mellish, Rt Hon Robert
Walden, Brian (B'ham, L'dyw'd)


Foot, Rt Hon Michael
Mendelson, John
Walker, Harold (Doncaster)


Ford, Ben
Mikardo, Ian
Walker, Terry (Kingswood)


Forrester, John
Millan, Bruce
Watkins, David


Fowler, Gerald (The Wrekin)
Miller, Dr M. S. E. (Kilbride)
Watkinson, John


Fraser, John (Lambeth, N'w'd)
Miller, Mrs Millie
Weetch, Ken


Freeson, Reginald
Mitchell, R. C. (Soton, Itchen)
Weitzman, David


Garrett, John (Norwich S)
Molloy, William
Wellbeloved, James


George, Bruce
Moonman, Eric
White, Frank R. (Bury)


Gilbert, Dr John
Morris, Alfred (Wythenshawe)
White, James (Pollok)


Ginsburg David
Morris, Charles R. (Openshaw)
Whitehead, Phillip


Golding, John
Morris, Rt Hon J. (Aberavon)
Willey, Rt Hon Frederick


Gould, Bryan
Mulley, Rt Hon Frederick
Williams, Alan (Swansea W)


Gourlay, Harry
Murray, Ronald King
Williams, Alan, Lee (H'church)


Grant, George (Morpeth)
Newens, Stanley
Williams, Rt Hn Shirley (Hertford)


Grant, John (Islington C)
Noble, Mike
Williams, W. T. (Warrington)


Grocott, Bruce
Oakes, Gordon
Wilson, Alexander (Hamilton)


Hamilton, W. W. (Central Fife)
Ogden, Eric
Wilson, Rt Hon H. (Huyton)


Hamling, William
O'Malley, Rt Hon Brian
Wilson, William (Coventry SE)


Hardy, Peter
Orbach, Maurice
Wise, Mrs Audrey


Harrison, Walter (Wakefield)
Ovenden, John
Woodall, Alec


Hattersley, Rt Hon Roy
Owen, Dr David
Woof, Robert


Hatton, Frank
Padley, Walter
Wrigglesworth, Ian


Hayman, Mrs Helene
Palmer, Arthur
Young, David (Bolton E)


Heffer, Eric S.
Park, George



Hooley, Frank
Parker, John
TELLERS FOR THE NOES:


Horam, John
Parry, Robert
Mr. Joseph Harper and


Hoyle, Douglas (Nelson)
Pavitt, Laurie
Mr. James Hamilton.

Question accordingly negatived.

Mr Norman Lamont: I beg to move Amendment No. 6, in page 4, line 1, after 'more' and insert
'or
(ii) he was retired from an occupation in which persons customarily retire before attaining the age of 65, or
(iii) he was retired and his retirement was caused by redundancy, or
(iv) he was retired and upon his retirement he received a lump sum from such a scheme or fund as is mentioned in sections 208, 218, subsection (1) or subsection (2) of section 221 or section 226 of the Taxes Act or from an exempt approved scheme or statutory scheme as defined in Chapter 2 of Part 2 of the Finance Act 1970 or under such policies or contracts as are mentioned in the proviso to section 19(3) of the Taxes Act, or
(v) he was retired and upon his retirement he received a lump sum in consideration or in consequence of or otherwise in connection with the termination of an office or employment'.
The Chief Secretary will find it difficult, even at his most bland, to refuse the logic of the modest demands made in the amendment. It is designed to help various specific categories of retired people and to raise the point at which the 10 per cent. surcharge begins to bite from £1,000 to £1,500. In other words, the amendment would put the people listed in the amendment in the same position as the over-65s.
The Chief Secretary cannot argue that the amendment would help the rich, because it is specifically confined to the categories of people mentioned. He cannot argue that it would go very wide and give money to people who have inherited investments, because it is confined to retired people as defined in the amendment. He cannot argue that it would help the relatively well off, those with investment income as compared with those without.
The amendment is designed to put those who have retired either without a pension or with a reduced pension in the same position that they might have been in had they been drawing a pension from a pension scheme. The categories referred to in the amendment are, first, those who have taken a lump sum as part of an authorised pension scheme; secondly, those who have taken a lump sum on retirement, even if the lump sum was not actually from a pension scheme but was connected with their job; thirdly, those who have been made redundant

and who have an income from investments; and, fourthly, those who have retired early under the age of 65 and have an income from investments.
With the last two categories the logic of the case is fairly obvious. Here we have groups of people who have retired early, who have been retired early, and who are faced with unexpected misfortune. They have had less time to save and plan their affairs and they have not been getting the full benefit of pension arrangements which they might otherwise have had.
There are more particular reasons for supporting the relaxation of the investment income surcharge for the first two categories. These reasons relate to the treatment of people drawing pensions from authorised pension schemes as compared with those who have no such pensions and simply have an income from investments. The first of those two categories are those I referred to earlier, people who have taken a lump sum as part of a pension, as they are allowed to do under certain types of pension schemes. They may buy an annuity: they may simply invest money and live in their retirement on the investment income. Either way they would be subject to the investment income surcharge and either way they would be taxed more severely than they would be if they were drawing a regular pension from a regular pension scheme.
One example of this kind that has been drawn to the attention of many members of this Committee is the FSSU scheme for retired university teachers. This is a scheme which allows retired university teachers to take a lump sum in lieu of pension. Such people will find themselves at a disadvantage compared with other people who continue to draw a retirement pension. Those people will find themselves paying the surcharge if their investment income, which is in place of a pension, is over £1,000 or £1,500 if they are over 65. Such people have already made their retirement plans. They made them to take advantage of the legislation as it existed at the time. Now they will be penalised by these measures which the Chief Secretary is putting forward.
I hope that one of the arguments that he will not put forward will be the hoary argument about annuities being tax free.


We all know that they are not tax free in any meaningful sense. It is merely that a person is given something back to invest it in another way. I do not think that that justifies the use of the term "tax free".
The fourth category comprises those who have retired and who may not have had a lump sum as part of the formal arrangements of their penson scheme but who have been given a lump sum, perhaps as compensation for loss of job or loss of office. Those people, too, have had to live off the investment income of that lump sum. Some months ago I wrote a letter to a newspaper about a number of people in this category. I received a large number of letters from people who found themselves hit by the investment income surcharge in this way.
9.0 p.m.
I remember particularly one from a gentleman who does not work very far from this House and who had been in the Colonial Service and who had been retired early, without having the opportunity to complete his full career. He had been given a lump sum in lieu of pension and had had to take it because the Government could not guarantee the payment of his pension. He had to take a large part of his pension as a lump sum because the regulations specified that the remaining pension would be paid only if he did so. When that person returned to the United Kingdom he was, like many people who had been in the Colonial Service, ineligible to join the National Insurance Scheme. He was without a State pension and without a pension from his job. He had to live on the investment income from the lump sum which was specifically given to him for loss of office.
Many people are in this category, and they manage their own investments instead of having pensions from their jobs. Surely their tax treatment should be analogous to that which is accorded to people who draw pension from an approved scheme. Pensions are treated as earned income, yet the income from the lump sum which has been invested is treated as unearned income. The two situations are similar, and it is unfair that that category should be treated differently.
Many of these people have been particularly hard hit by inflation, by the collapse of the Stock Market in the past few months and by dividend restraint, which has directly hit their incomes. It is one thing to be told that one has unearned income which will be taxed at a higher rate, and it is another thing to be told that the income will be restricted by an amount that is well below the level of inflation.
It is clear that the Government feel a little guilty about retired people because of the distinction they have made between the over-65s and the under-65s and the £1,000 surcharge and the £1,500 surcharge. The £1,500 is hardly generous when one considers national average earnings. There are strong arguments for making wider and more far-reaching demands than are made in the amendment.
I hope that the Chief Secretary will consider the amendment carefully and sympathetically, because it is very restricted and modest. I hope that he will not tell us about the personal allowance, because that applies to next year and we are talking about this year. I hope that he will not tell us about annuities and pretend that handing back to people their own money is giving them a tax bonus. The people who are covered by the amendment have been particularly hard hit and they are not rich people. The amendment does not go very wide, and I hope that the Chief Secretary will find it acceptable.

Mr. Tim Renton: I fully support the amendment which has been moved so lucidly by my hon. Friend the Member for Kingston-upon-Thames (Mr. Lamont). After my hon. Friend's catalogue of the things which he hopes the Chief Secretary will not tell us I get new heart in believing that on this occasion, despite the performance so far, the Chief Secretary will accept the amendment.
I wish to speak to the amendment particularly in relation to those who either purchase an annuity when they retire or, when they retire early, decide to commute part of their pension to buy an annuity. If a pension is commuted to buy an annuity only a certain portion of the income is treated as a return of interest and treated as unearned income.
There are many valid reasons why people decide on retiring early to commute part of a pension and buy an annuity instead. One instance is that of a person who retires early, perhaps after work overseas. Another instance is that of a person who may find that the widow's provision in an old-fashioned pension scheme is inadequate and he may decide to commute as much of that pension as he can to buy an annuity in which the widow's provision will be considerably more generous. It is that person who is now to be clobbered by the reduction in the threshold of investment income. I want to see that threshold left at £2,000, but if that is impossible I ask that these people be given the small degree of relief sought in the amendment.
I hope the Committee will forgive me if I read an extract from a letter written by a constituent who left the Navy in 1947 with no job, no pension and no house, and who is now paying the full rate of tax on every penny of his income from savings which he has made since then. He writes:
When I retired I commuted part of my pension small as it was with the intention of using capital together with the money from an insurance policy which had just matured to purchase an annuity for my wife and myself. However, I was advised to wait until I was 70 before doing so and in the meantime to use the money to purchase Funding Loan stock. I had hardly done so when the value of stock fell drastically and it has reached a level where it would be folly now to sell in order to purchase an annuity. The rest of my money is tied up in equities so I cannot sell them in order to live on capital, and in any case I must be in a position to leave my wife as much capital as I can.
That is a letter from a man who never quite reached the point of buying an annuity, but there are many others who have been advised that the only way to provide for their old age and for their wives in future is to purchase an annuity. They budgeted carefully and now find themselves on low earnings having to pay considerably more tax. In view of the pace of inflation it is these people whom this amendment seeks to cover, who are caught in an unpleasant poverty trap. These have to pay more for the necessities of life, they find that their equities have fallen in value, and now, at this late stage in the financial year, they are being asked to budget for further amounts of tax.
The Financial Secretary in an earlier discussion wept crocodile tears over the situation of widows. I hope that on this occasion the Chief Secretary will see fit to accept the amendment which seeks to help a small band of people.

Mr. MacGregor: I, too, support the amendment. I have met a number of people in the past few months, both in my constituency and elsewhere, who find themselves in the situation outlined in the amendment. This applies especially to people in their fifties who have retired because of natural wastage in their companies, because of the necessity for their companies to keep down wage and salary costs, or because their companies have gone into liquidation.
I do not expect to receive much sympathy from the Chief Secretary. No doubt we shall hear all the usual noises. However, I hope that the Chief Secretary will not say that there are other, more deserving cases. We are well aware of that. We are concerned to assist this particular deserving case.
The amendment is justified, first, on the ground of fairness. I accept that many of the people covered by the amendment are former managers or executives, but they comprise deserving cases. If they have a slightly higher-than-average income, or have had in the past, and if they have higher expenditure commitments, they will continue to have to meet those commitments. Therefore, in their situation they are a deserving case.
I remind the Chief Secretary that we are not asking for any extra benefits for these people. We are asking that their net income should not be reduced from what they expected before the advent of the Bill. It is a sad fact of life that in the present economic situation many people find themselves redundant—and I fear that there will be more of them in the next few months.
These people would normally expect to be in an earned income situation until retirement at 60 or 65 years of age. They would not expect to be caught by the investment income surcharge which the Bill seeks to impose upon them. Yet, particularly if the sad fact of redundancy has hit them in the last few months, their budgets are already planned on the basis of their earned incomes and their investment incomes without this surcharge,


which has hit them even harder. Some of them have contracted second marriages and still have young children to educate. Another fear is that at 60 or 65 years of age it is difficult to get back into a job situation with the earned incomes that they had been receiving before.
I suggest that this special, small group is deserving of consideration. These people are already suffering a dramatic decline in their incomes, with all the prospects of inflation and higher costs which we discussed in the earlier part of the debate, and they are certainly suffering a big decline in morale. We are asking that they should not be hit further through the Bill.

Mr. Joel Barnett: I congratulate the hon. Member for Kingston-upon-Thames (Mr. Lamont) on his elevation to the Opposition Front Bench. It has taken him a long time, compared with what I expected, to get there. I thought that he would have got there much quicker. I have certainly long recognised the need for him to be there. I say that in the nicest possible way.
What I like about the hon. Gentleman is the way that he always tells me in advance what I should not say and answers in advance what he thinks I will say. This time he has missed a few points that I can tell him.
I turn now to the group of people to whom the amendment refers. It is not possible to estimate the cost, as I am sure the hon. Gentleman and others realise. The amendment groups together a variety of categories of people for whom relief is sought for retirement before the age of 65, for those who retire before the age of 65 because of redundancy, for those who retire and upon retirement receive lump sum benefits from approved occupational pension schemes, or for those who retire and upon retirement receive lump sum payments.
The amendment suffers from a basic weakness in that it rests on a test of retirement which is not defined. Frankly, are simply "was retired". Frankly, it is not possible to use such a definition. I doubt whether it would be possible successfully to have legislation on the basis of the words "was retired".
First, I want to deal with those who retire before the age of 65. That class of beneficiary comprises those who retire

from an occupation in which persons customarily retire before attaining the age of 65".
They include, amongst others, civil servants, who may retire on pension at the age of 60, members of the armed forces and all but the most senior grades in the police force. The concession would help an Army officer who retired with a Service pension and gratuity at the age of 50 and has an investment income sufficient to bring him within the liability to the surcharge. Those who retire from such occupations in middle age cannot be said necessarily to have finished any gainful employment. They may go on to take other employment later. It cannot be said that a man who retires at the age of 50 because that is the customary age of retirement in his particular job will not—indeed, it is likely that he will—go on to do some other work. It is not a real retirement in the accepted sense of the word. Many such men will want to work again and will actively seek other employment.
9.15 p.m.
So the "customary age of retirement" would open up endless arguments. For example, the customary age of retirement for a cricketer or footballer is, comparatively, very early, but I imagine that that is no reason to give them a special concession. I know that hon. Members opposite think that everybody should have had that concession, but the amendment seeks to bracket that type of person for a special concession with a man who has worked all his life to the age of 65. That is not a definition to which we could agree.
One would have sympathy with the next category, that of retirement caused by redundancy, but this is sometimes voluntary before the age of 65, with acceptance of the lump sum payment. But a more important argument is that under the Redundancy Payments Act 1965 the maximum lump sum is £2,400 tax-free. The investment income from that is hardly likely to exceed £1,000 per annum. So, from the redundancy payment itself no question of the investment income surcharge would arise.

Mr. John Nott: With great respect, redundancy payments are not geared to the Redundancy Payments Act. A good employer may pay much more


than an employee was entitled to under the Act.

Mr. Barnett: I intended to come to that argument. I am dealing now with redundancy via the Act. The maximum is £2,400, so special relief would apply not to any income from the lump sum but only from the person's other investment income. I hasten to add that this does not mean that such an employee is not a deserving case. He may be: all that I am saying is that that is not a category for which one would want to provide special relief before the age of 65.
Then there is the person who is in an approved superannuation scheme and takes a lump sum payment. There is some misunderstanding here. Fully approved schemes under the old or new codes cannot normally begin paying annuities to someone who is aged less than 60. The same is broadly true of an approved retirement annuity contract under Section 226 of the Taxes Act. The fact that a company can provide an employee with a larger tax-free benefit cannot be an argument for classing that person at the age of 40 or 50 for relief under any Act with a man or woman aged 65. Yet that is what the amendment seeks to do.
The other major category to which the hon. Member referred concerned lump sum payments on retirement. This final category presumably would include golden handshakes as well. With a golden handshake a person can get £5,000 tax-free at any age. I can hardly believe that the hon. Gentleman would want to give that kind of person, who has got his £5,000 tax-free, the same relief as a man who retires after a full working life at the age of 65. It cannot be a reasonable proposition.
Therefore, I am afraid that for those reasons I could not accept that argument or, indeed, any of the arguments which hon. Members have put to me. The four

alternative tests which the hon. Gentleman seeks to persuade the committee to accept for special relief are, for the reasons I have given, defective. It would not be right to give the same concession for those categories of people as one gives for a man who has worked all his life to the age of 65. For those reasons, therefore, I cannot accept the amendment. I hope that the hon. Gentleman will realise its defectiveness and feel able to withdraw it.

Mr. David Howell: I have only a few comments to make at the end of this debate, which I am afraid has taken a remarkably similar course to the earlier debate, and they are, simply, these. Before the Bill was put forward, we started with all these categories—many of them in difficulties and many of them, as the Chief Secretary recognises, deserving—with a £2,000 exemption threshold. As a result of what the Government would like to do and will, clearly, attempt to do now, that is lowered to £1,000. We have put forward a modest plea that the Government desist and hold their hand in putting this additional burden at this time on these people. Clearly, the Government will resist that plea.
It is not a question of concessions or reliefs. It is a question of holding back from placing an additional burden on a group of people who can ill afford it. On both this and previous amendments, all I can say is that I hope that the political bosses of the Left, who seem to run policies of this kind, feel that they have done a good evening's work in bringing home to these people, both the disabled and these categories, an additional burden. I hope that they feel good inside. We are sickened by this approach, and we shall once again register our protest and our deep feeling by voting.

Question put, That the amendment be made:

The Committee divided: Ayes 254, Noes 271.

Division No. 56.]
AYES
[9.25 p.m.


Adley, Robert
Baker, Kenneth
Biggs-Davison, John


Aitken, Jonathan
Banks, Robert
Blaker, Peter


Alison, Michael
Beith, A. J.
Body, Richard


Amery, Rt Hon Julian
Bell, Ronald
Boscawen, Hon Robert


Arnold, Tom
Bennett, Dr Reginald (Fareham)
Bowden, A. (Brighton Kemptown)


Atkins, Rt Hon H. (Spelthorne)
Benyon, W.
Boyson, Dr Rhodes (Brent)


Awdry, Daniel
Berry, Hon Anthony
Braine, Sir Bernard


Bain, Mrs Margaret
Biffen, John
Brittan, Leon




Brotherton, Michael
Hicks, Robert
Peyton, Rt Hon John


Brown, Sir Edward (Bath)
Higgins, Terence L.
Pink, R. Bonner


Bryan, Sir Paul
Hooson, Emlyn
Price, David (Eastleigh)


Buchanan-Smith, Alick
Hordern, Peter
Prior, Rt Hon James


Buck, Antony
Howe, Rt Hon Sir Geoffrey
Pym, Rt Hon Francis


Budgen, Nick
Howell, David (Guildford)
Raison, Timothy


Bulmer, Esmond
Howells, Geraint (Cardigan)
Rathbone, Tim


Burden, F. A.
Hunt, John
Rees, Peter (Dover &amp; Deal)


Carlisle, Mark
Hurd, Douglas
Rees-Davies, W. R.


Carr, Rt Hon Robert
Hutchison, Michael Clark
Reid, George


Chalker, Mrs Lynda
Irving, Charles (Cheltenham)
Renton, Rt Hon Sir D. (Hunts)


Channon, Paul
James, David
Renton, Tim (Mid-Sussex)


Churchill, W. S.
Jenkin, Rt Hon P.
Rhys Williams, Sir Brandon


Clark, Alan (Plymouth, Sutton)
Johnson Smith, G. (E Grinstead)
Ridley, Hon Nicholas


Clark, William (Croydon, S.)
Kaberry, Sir Donald
Ridsdale, Julian


Clarke, Kenneth (Rushcliffe)
Kellett-Bowman, Mrs Elaine
Rifkind, Malcolm


Cockcroft, John
Keishaw, Anthony
Roberts, Wyn (Conway)


Cooke, Robert (Bristol W)
Kilfedder, James
Rodgers, Sir John (Sevenoato)


Cope, John
Kimball, Marcus
Rossi, Hugh (Hornsey)


Cormack, Patrick
King, Evelyn (South Dorset)
Rost, Peter (SE Derbyshire)


Corrie, John
King, Tom (Bridgwater)
Royle, Sir Anthony


Costain, A. P.
Kitson, Sir Timothy
Sainsbury, Tim


Crawford, Douglas
Knight, Mrs Jill
Scott, Nicholas


Critchley, Julian
Knox, David
Shaw, Giles (Pudsey)


Crouch, David
Lamont, Norman
Shelton, William (Streatham)


Crowder, F. P.
Lane, David
Shepherd, Colin


Dean, Paul (N Somerset)
Latham, Michael (Melton)
Shersby, Michael


Dodsworth, Geoffrey
Lawrence, Ivan
Silvester, Fred


Douglas-Hamilton, Lord James
Lawson, Nigel
Sims, Roger


Drayson, Burnaby
Lester, Jim (Beeston)
Sinclair, Sir George


du Cann, Rt Hon Edward
Lewis, Kenneth (Rutland)
Skeet, T. H. H.


Durant, Tony
Lloyd, Ian
Smith, Cyril (Rochdale)


Dykes, Hugh
Loveridge, John
Smith, Dudley (Warwick)


Eden, Rt Hon Sir John
Luce, Richard
Speed, Keith


Edwards, Nicholas (Pembroke)
MacCormick, Iain
Spence, John


Elliott, Sir William
McCrindle, Robert
Spicer, James (W Dorset)


Emery, Peter
Macfarlane, Neil
Spicer, Michael (S Worcester)


Evans, Gwynfor (Carmarthen)
MacGregor, John
Sproat, Iain


Eyre, Reginald
Macmillan, Rt Hon M. (Farnham)
Stainton, Keith


Fairgrieve, Russell
McNair-Wilson, M. (Newbury)
Stanbrook, Ivor


Farr, John
McNair-Wilson, P. (New Forest)
Stanley, John


Fell, Anthony
Madel, David
Steel, David (Roxburgh)


Finsberg, Geoffrey
Marshall, Michael (Arundel)
Steen, Anthony (Wavertree)


Fisher, Sir Nigel
Marten, Neil
Stewart, Donald (Western Isles)


Fletcher, Alex (Edinburgh N)
Mates, Michael
Stewart, Ian (Hitchin)


Fookes, Miss Janet
Mather, Carol
Stokes, John


Fowler, Norman (Sutton C'f'd)
Maude, Angus
Stradling Thomas, J.


Fox, Marcus
Mawby, Ray
Taylor, R. (Croydon NW)


Fraser, Rt Hon H. (Stafford &amp; St
Maxwell-Hyslop, Robin
Taylor, Teddy (Cathcart)


Freud, Clement
Mayhew, Patrick
Tebbit, Norman


Galbraith, Hon. T. G. D.
Meyer, Sir Anthony
Thatcher, Rt Hon Margaret


Gardiner, George (Reigate)
Miller, Hal (Bromsgrove)
Thomas, Rt Hon P. (Hendon S)


Gardner, Edward (S Fylde)
Mills, Peter
Thompson, George


Gilmour, Rt Hon Ian (Chesham)
Mitchell, David (Basingstoke)
Townsend, Cyril D.


Gilmour, Sir John (East Fife)
Moate, Roger
van Straubenzee, W. R.


Glyn, Dr Alan
Monro, Hector
Vaughan, Dr Gerard


Godber, Rt Hon Joseph
Montgomery, Fergus
Viggers, Peter


Goodhart, Philip
Moore, John (Croydon C)
Wainwright, Richard (Colne V)


Goodhew, Victor
More, Jasper (Ludlow)
Wakeham, John


Goodlad, Alastair
Morgan-Giles, Rear-Admiral
Walder, David (Clitheroe)


Gorst, John
Morris, Michael (N'th'pton S)
Walker Rt Hon P. (Worcester)


Gow, Ian (Eastbourne)
Morrison, Charles (Devizes)
Walker-Smith, Rt Hon Sir Derek


Gower, Sir Raymond (Barry)
Morrison, Peter (Chester)
Walters, Dennis


Grant, Anthony (Harrow C)
Neave, Airey
Warren, Kenneth


Gray, Hamish
Nelson, Anthony
Watt, Hamish


Grieve, Percy
Neubert, Michael
Weatherill, Bernard


Grimond, Rt Hon J.
Newton, Tony
Wells, John


Grist, Ian
Normanton, Tom
Welsh, Andrew


Grylls, Michael
Nott, John
Wiggin, Jerry


Hall, Sir John
Onslow, Cranley
Wigley, Dafydd


Hall-Davis, A. G. F.
Oppenheim, Mrs Sally
Wilson, Gordon (Dundee E)


Hamilton, Michael (Salisbury)
Osborn, John
Winterton, Nicholas


Hannam, John
Page, John (Harrow West)
Young, Sir G. (Ealing, Acton)


Harvie Anderson, Rt Hon Miss
Page, Rt Hon R. Graham (Crosby)
Younger, Hon George


Havers, Sir Michael
Pardoe, John



Hawkins, Paul
Parkinson, Cecil
TELLERS FOR THE AYES:


Hayhoe, Barney
Pattie, Geoffrey
Mr. Spencer Le Marchant and


Henderson, Douglas
Penhaligon, David
Mr. Michael Roberts.







NOES


Allaun, Frank
Fitt, Gerard (Belfast W)
Marshall, Dr Edmund (Goole)


Archer, Peter
Flannery, Martin
Marshall, Jim (Leicester, S.)


Armstong, Ernest
Fletcher, Raymond (Ilkeston)
Mason, Rt Hon Roy


Ashton, Joe
Fletcher, Ted (Darlington)
Meacher, Michael


Atkins, Ronald (Preston N)
Foot, Rt Hon Michael
Mellish, Rt Hon Robert


Atkinson, Norman
Ford, Ben
Mendelson, John


Bagier, Gordon A. T.
Forrester, John
Mikardo, Ian


Barnett, Guy (Greenwich)
Fowler, Gerald (The Wrekin)
Millan, Bruce


Barnett, Rt Hon Joel
Fraser John (Lambeth, N'wd)
Miller, Dr M. S. E. (Kilbride)


Bates, Alf
Freeson, Reginald
Miller, Mrs Millie


Bean, R. E.
Garrett, John (Norwich S)
Mitchell, R. C. (Soton, Itchen)


Benn, Rt Hon Anthony Wedgwood
Garrett, W. E. (Wallsend)
Molloy, William


Bennett, Andrew (Stockport N)
George, Bruce
Moonman, Eric


Bidwell, Sydney
Gilbert, Dr John
Morris, Alfred (Wythenshawe)


Bishop, E. S.
Ginsburg, David
Morris, Charles R. (Openshaw)


Blenkinsop, Arthur
Golding, John
Morris, Rt Hon J. (Aberavon)


Boardman, H.
Gould, Bryan
Mulley, Rt Hon Frederick


Boothroyd, Miss Betty
Gourlay, Harry
Murray, Ronald King


Bottomley, Rt Hon Arthur
Grant, George (Morpeth)
Newens, Stanley


Boyden, James (Bish Auck)
Grant, John (Islington C)
Noble, Mike


Bradley, Tom
Grocott, Bruce
Oakes, Gordon


Broughton, Sir Alfred
Hamilton, W. W. (Central Fife)
Ogden, Eric


Brown, Hugh D. (Provan)
Hamling, William
O'Malley, Rt Hon Brian


Brown, Robert C. (Newcastle W)
Hardy, Peter
Orbach, Maurice


Buchan, Norman
Harper Joseph
Ovenden, John


Buchanan, Richard
Harrison, Walter (Wakefield)
Owen, Dr David


Butler, Mrs Joyce (Wood Green)
Hattersley, Rt Hon Roy
Padley, Walter


Callaghan, Jim (Middleton &amp; P)
Hatton, Frank
Palmer, Arthur


Campbell, Ian
Hayman, Mrs Helene
Park, George


Canavan, Dennis
Heffer, Eric S.
Parker, John


Cant, R. B.
Hooley, Frank
Parry, Robert


Carmichael, Neil
Horam, John
Pavitt, Laurie


Carter, Ray
Hoyle, Douglas (Nelson)
Peart, Rt Hon Fred


Carter-Jones, Lewis
Huckfield Leslie
Pendry, Tom


Cartwright, John
Hughes, Rt Hon C. (Anglesey)
Perry, Ernest


Castle, Rt Hon Barbara
Hughes, Mark (Durham)
Phipps, Dr Colin


Clemitson, Ivor
Hughes, Robert (Aberdeen N)
Prentice, Rt Hon Reg


Cocks, Michael (Bristol S)
Hughes, Roy (Newport)
Prescott, John


Cohen, Stanley
Hunter, Adam
Price, C. (Lewisham W)


Coleman, Donald
Irvine, Rt Hon Sir A. (Edge Hill)
Price, William (Rugby)


Colquhoun, Mrs Maureen
Jackson, Miss Margaret (Lincoln)
Radice, Giles


Concannon, J. D.
Janner Greville
Rees, Rt Hon Merlyn (Leeds S)


Cook, Robin F. (Edin C)
Jay, Rt Hon Douglas
Richardson, Miss Jo


Corbett, Robin
Jeger, Mrs Lena (W'st'd &amp; W'df'd)
Roberts, Albert (Normanton)


Cox, Thomas (Tooting)
Jenkins, Hugh (Putney)
Roberts, Gwilym (Cannock)


Craigen, J. M. (Merryhill)
John, Brynmor
Robertson, John (Paisley)


Cronin, John
Johnson, James (Hull West)
Roderick, Caerwyn


Crosland, Rt. Hon Anthony
Jones, Alec (Rhondda)
Rodgers, George (Chorley)


Cryer, Bob
Jones, Barry (East Flint)
Rodgers, William (Stockton)


Cunningham, Dr J. (Whiteh)
Jones, Dan (Burnley)
Rooker, J. W.


Dalyell, Tam
Judd, Frank
Roper, John


Davidson, Arthur
Kaufman, Gerald
Rose, Paul B.


Davies, Bryan (Enfield N)
Kelley, Richard
Ross, Rt Hon W. (Kilm'nock)


Davies, Denzil (Llanelli)
Kerr, Russell
Rowlands, Ted


Davies, Ifor (Gower)
Kilroy-Silk, Robert
Ryman, John


Davis, Clinton (Hackney C)
Kinnock Neil
Sandelson, Neville


Deakins, Eric
Lambie, David
Sedgemore, Brian


de Freitas, Rt Hon Sir Geoffrey
Lamborn, Harry
Selby, Harry


Delargy, Hugh
Lamond, James
Shaw, Arnold (Ilford South)


Dell, Rt Hon Edmund
Leadbitter, Ted
Sheldon, Robert (Ashton-u-Lyne)


Dempsey, James
Lee, John
Silkin, Rt Hon John (Deptford)




Silverman, Julius


Doig, Peter
Lestor, Miss Joan (Eton &amp; Slough)
Skinner, Dennis


Dormand, J. D.
Lewis, Arthur (Newham N)
Small, William


Douglas-Mann, Bruce
Lewis, Ron (Carlisle)
Smith, John (N Lanarkshire)


Duffy, A. E. P.
Lipton, Marcus
Snape, Peter


Dunn, James A.
Litterick, Tom
Spearing, Nigel


Dunnett, Jack
Loyden, Eddie
Spriggs, Leslie


Dunwoody, Mrs Gwyneth
Luard, Evan
stallard, A. W.


Eadie, Alex
Lyon, Alexander (York)
Stewart, Rt Hn M. (Fulham)


Edelman, Maurice
Lyons, Edward (Bradford W)
Stoddart, David


Edge, Geoff
Mabon, Dr J. Dickson
Stott, Roger


Edwards, Robert (Wolv SE)
McCartney, Hugh
Strang, Gavin


Ellis, John (Brigg &amp; Scun)
McElhone, Frank
Swain, Thomas


Ellis, Tom (Wrexham)
MacFarquhar, Roderick
Taylor, Mrs Ann (Bolton W)


English, Michael
Mackenzie, Gregor
Thomas, Jeffrey (Abertillery)


Ennals, David
McMillan, Tom (Glasgow C)
Thomas, Ron (Bristol NW)


Evans, Ioan (Aberdare)
Madden, Max
Thorne, Stan (Preston South)


Evans, John (Newton)
Magee, Bryan
Tierney, Sydney


Ewing, Harry (Stirling)
Mahon, Simon
Tinn, James


Faulds, Andrew
Marks, Kenneth
Tomlinson, John


Fernyhough, Rt Hon E.
Marquand, David
Torney, Tom







Urwin, T. W.
White, Frank R. (Bury)
Wilson, William (Coventry SE)


Varley, Rt Hon Eric G.
White, James (Pollok)
Wise, Mrs Audrey


Wainwright, Edwin (Dearne V)
Whitehoad, Phillip
Woodall, Alec


Walden, Brian (B'ham, L'dyw'd)
Willey, Rt Hon Frederick
Woof, Robert


Walker, Harold (Doncaster)
Williams, Alan (Swansea W)
Wrigglesworth, Ian


Walker, Terry (Kingswood)
Williams, Alan, Lee (H'church)
Young, David (Bolton E)


Watkins, David
Williams, Rt Hon Shirley (Hertford)



Watkinson, John
Williams, W. T. (Warrington)
TELLERS FOR THIS NOES:


Weetch, Ken
Wilson, Alexander (Hamilton)
Mr. James Hamilton and


Weitzman, David
Wilson, Rt Hon H. (Huyton)
Mr. Walter Johnson.


Wellbeloved, James

Question accordingly negatived.

Amendment proposed: No. 7, in page 4, line 1, after 'more', insert
'or

(ii) she was a widow with a child or children in respect of which she was entitled to relief under the Income Tax Acts; or
(iii) she was a widow in receipt of National Insurance widow's benefit; or

(iv) she was the widow of such a person as is mentioned in paragraph 1 of Schedule 7 to this Act'.—[Mrs. Thatcher.]

Question put, That the amendment be made:—

The Committee divided: Ayes 255, Noes 271.

Division No. 57.]
AYES
[9.35 p.m.


Adley, Robert
Durant, Tony
Hutchison, Michael Clark


Aitken, Jonathan
Dykes, Hugh
Irving, Charles (Cheltenham)


Alison, Michael
Eden, Rt Hon Sir John
James, David


Amery, Rt Hon Julian
Edwards, Nicholas (Pembroke)
Jenkin, Rt Hon P. (Wanst'd &amp; W'df'd)


Arnold, Tom
Elliott, Sir William
Johnson Smith, G. (E Grinstead)


Atkins, Rt Hon H. (Spelthorne)
Emery, Peter
Kaberry, Sir Donald


Awdry, Daniel
Evans, Gwynfor (Carmarthen)
Kellett-Bowman, Mrs Elaine


Bain, Mrs Margaret
Eyre, Reginald
Kershaw, Anthony


Baker, Kenneth
Fairgrieve, Russell
Kilfedder, James


Banks, Robert
Farr, John
Kimball, Marcus


Beith, A. J.
Fell, Anthony
King, Evelyn (South Dorset)


Bell, Ronald
Finsberg Geoffrey
King, Tom (Bridgwater)


Bennett, Dr Reginald (Fareham)
Fisher, Sir Nigel
Kitson, Sir Timothy


Benyon, W.
Fletcher, Alex (Edinburgh N)
Knight, Mrs Jill


Berry, Hon Anthony
Fookes, Miss Janet
Knox, David


Biffen, John
Fowler, Norman (Sutton C'f'd)
Lamont, Norman


Biggs-Davison, John
Fox, Marcus
Lane, David


Blaker, Peter
Fraser, Rt Hon H. (Stafford &amp; St)
Latham, Michael (Melton)


Body, Richard
Freud, Clement
Lawrence, Ivan


Boscawen, Hon Robert
Galbraith, Hon. T. G. D.
Lawson, Nigel


Bowden, A. (Brighton, Kemptown)
Gardiner, George (Reigate)
Lester, Jim (Beeston)


Boyson, Dr Rhodes (Brent)
Gardner, Edward (S Fylde)
Lewis, Kenneth (Rutland)


Braine, Sir Bernard
Gilmour, Rt Hon Ian (Chesham)
Lloyd, Ian


Brittan, Leon
Gilmour, Sir John (East Fife)
Loveridge, John


Brotherton, Michael
Glyn, Dr Alan
Luce, Richard


Brown, Sir Edward (Bath)
Godber, Rt Hon Joseph
MacCormick, Iain


Bryan, Sir Paul
Goodhart, Philip
McCrindle, Robert


Buchanan-Smith, Alick
Goodhew, Victor
Macfarlane, Neil


Buck, Antony
Goodlad, Alastair
MacGregor, John


Budgen, Nick
Gorst, John
Macmillan, Rt Hon M. (Farnham)


Bulmer, Esmond
Gower, Sir Raymond (Barry)
McNair-Wilson, M. (Newbury)


Burden, F. A.
Grant, Anthony (Harrow C)
McNair-Wilson, P. (New Forest)


Carlisle, Mark
Gray Hamish
Madel, David


Carr, Rt Hon Robert
Grieve, Percy
Marshall, Michael (Arundel)


Chalker, Mrs Lynda
Grimond, Rt Hon J.
Marten, Neil


Channon, Paul
Grist, Ian
Mates, Michael


Churchill, W. S.
Grylls, Michael
Mather, Carol


Clark, Alan (Plymouth, Sutton)
Hall, Sir John
Maude, Angus


Clark, William (Croydon S)
Hall-Davis, A. G. F.
Mawby, Ray


Clarke, Kenneth (Rushcliffe)
Hamilton, Michael (Salisbury)
Maxwell-Hyslop, Robin


Cockcroft, John
Hannam, John
Mayhew, Patrick


Cooke, Robert (Bristol W)
Harvie Anderson, Rt Hon Miss
Meyer, Sir Anthony


Cope, John
Havers, Sir Michael
Miller, Hal (Bromsgrove)


Cormack, Patrick
Hawkins, Paul
Mills, Peter


Corrie, John
Hayhoe, Barney
Mitchell, David (Basingstoke)


Costain, A. P.
Henderson, Douglas
Moate, Roger


Crawford, Douglas
Hicks, Robert
Monro, Hector


Critchley, Julian
Higgins, Terence L.
Montgomery, Fergus


Crouch, David
Hooson, Emlyn
Moore, John (Croydon C)


Crowder, F. P.
Hordern, Peter
More, Jasper (Ludlow)


Dean, Paul (N Somerset)
Howe, Rt Hon Sir Geoffrey
Morgan-Giles, Rear-Admiral


Dodsworth, Geoffrey
Howell, David (Guildford)
Morris, Michael (Northampton S)


Douglas-Hamilton, Lord James
Howells, Geraint (Cardigan)
Morrison, Charles (Devizes)


Drayson, Burnaby
Hunt, John
Morrison, Peter (Chester)


du Cann, Rt Hon Edward
Hurd, Douglas
Neave, Airey




Nelson, Anthony
Rodgers, Sir John (Sevenoaks)
Taylor, Teddy (Cathcart)


Neubert, Michael
Rossi Hugh (Hornsey)
Tebbit, Norman


Newton, Tony
Rost, Peter (SE Derbyshire)
Thatcher, Rt Hon Margaret


Normanton, Tom
Royle, Sir Anthony
Thomas, Datydd (Merioneth)


Nott, John
Sainsbury, Tim
Thomas, Rt Hon P. (Hendon S)


Onslow, Cranley
Scott, Nicholas
Thompson, George


Oppenheim, Mrs Sally
Shaw, Giles (Pudsey)
Townsend, Cyril D.


Osborn, John
Shelton, William (Streatham)
van Straubenzee, W. R.


Page, John (Harrow West)
Shepherd, Colin
Vaughan, Dr Gerard


Page, Rt Hon Ft. Graham (Crosby)
Shersby, Michael
Viggers, Peter


Pardoe, John
Silvester, Fred
Wainwright, Richard (Colne V)


Parkinson, Cecil
Sims, Roger
Wakeham, John


Pattie, Geoffrey
Sinclair, Sir George
Walder, David (Clitheroe)


Penhaligon, David
Skeet, T. H. H.
Walker, Rt Hon P. (Worcester)


Peyton, Rt Hon John
Smith, Cyril (Rochdale)
Walker-Smith, Rt Hon Sir Derek


Pink, R. Bonner
Smith, Dudley (Warwick)
Walters, Dennis


Price, David (Eastleigh)
Speed, Keith
Warren, Kenneth


Prior, Rt Hon James
Spence, John
Watt, Hamish


Pym, Rt Hon Francis
Spicer, Jim (W Dorset)
Weatherill, Bernard


Raison, Timothy
Spicer, Michael (S Worcester)
Wells, John


Rathbone, Tim
Sproat, Iain
Welsh, Andrew


Rees, Peter (Dover &amp; Deal)
Stainton, Keith
Wiggin, Jerry


Rees-Davies, W. R.
Stanbrook, Ivor
Wigley, Dafydd


Reid, George
Stanley, John
Wilson, Gordon (Dundee E)


Renton, Rt Hon Sir D. (Hunts)
Steel, David (Roxburgh)
Winterton, Nicholas


Renton, Tim (Mid-Sussex)
Steen, Anthony (Wavertree)
Young, Sir G. (Ealing, Acton)


Rhys Williams, Sir Brandon
Stewart, Donald (Western Isles)
Younger, Hon George


Ridley, Hon Nicholas
Stewart, Ian (Hitchin)



Ridsdale, Julian
Stokes, John
TELLERS FOR THE AYES:


Rifkind, Malcolm
Stradling Thomas, J.
Mr Spencer Le Marchant and


Roberts, Wyn (Conway)
Taylor, R. (Croydon NW)
Mr. Michael Roberts.




NOES


Allaun, Frank
Davies, Bryan (Enfield N)
Hamilton, James (Bothwell)


Archer, Peter
Davies, Denzil (Llanelli)
Hamilton, W. W. (Central Fife)


Armstrong, Ernest
Davies, Ifor (Gower)
Hamling, William


Ashton, Joe
Davis, Clinton (Hackney C)
Hardy, Peter


Atkins, Ronald (Preston N)
Deakins, Eric
Harper Joseph


Atkinson, Norman
de Freitas, Rt Hon Sir Geoffrey
Harrison, Walter (Wakefield)


Bagier, Gordon A. T.
Delargy, Hugh
Hattersley, Rt Hon Roy


Barnett, Guy (Greenwich)
Dell, Rt Hon Edmund
Hatton, Frank


Barnett, Rt Hon Joel
Dempsey, James
Hay man, Mrs Helene


Bates, Alf
Doig, Peter
Heffer, Eric S.


Bean, R. E.
Dormand, J. D.
Hooley, Frank


Benn, Rt Hon Anthony Wedgwood
Douglas-Mann, Bruce
Horam, John


Bennett, Andrew (Stockport N)
Duffy, A. E. P.
Hoyle, Douglas (Nelson)


Bidwell, Sydney
Dunn, James A.
Huckfield, Les


Bishop, E. S.
Dunnett, Jack
Hughes, Rt Hon C. (Anglesey)


Blenkinsop, Arthur
Dunwoody, Mrs Gwyneth
Hughes, Mark (Durham)


Boardman, H.
Eadie, Alex
Hughes, Robert (Aberdeen N)


Bottomley, Rt Hon Arthur
Edelman, Maurice
Hughes, Roy (Newport)


Boyden, James (Bish Auck)
Edge, Geoff
Hunter, Adam


Bradley, Tom
Edwards, Robert (Wolv SE)
Irvine, Rt Hon Sir A. (Edge Hill)


Broughton, Sir Alfred
Ellis, John (Brigg &amp; Scun)
Jackson, Miss Margaret (Lincoln)


Brown, Hugh D. (Provan)
Ellis, Tom (Wrexham)
Janner Greville


Brown, Robert C. (Newcastle W)
English, Michael
Jay, Rt Hon Douglas


Buchan, Norman
Ennals, David
Jeger, Mrs Lena


Buchanan, Richard
Evans, Ioan (Aberdare)
Jenkins, Hugh (Putney)


Butler, Mrs Joyce (Wood Green)
Evans, John (Newton)
John, Brynmor


Callaghan, Jim (Middleton &amp; P)
Ewing, Harry (Stirling)
Johnson, James (Hull West)


Campbell, Ian
Faulds, Andrew
Johnson, Walter (Derby S)


Canavan, Dennis
Fernyhough, Rt Hon E.
Jones, Alec (Rhondda)


Cant, R. B.
Fitt, Gerard (Belfast W)
Jones, Barry (East Flint)


Carmichael, Neil
Flannery, Martin
Jones, Dan (Burnley)


Carter, Ray
Fletcher, Raymond (Ilkeston)
Judd, Frank


Carter-Jones, Lewis
Fletcher, Ted (Darlington)
Kaufman, Gerald


Cartwright, John
Foot, Rt Hon Michael
Kelley, Richard


Castle, Rt Hon Barbara
Ford, Ben
Kerr, Russell


Clemitson, Ivor
Forrester, John
Kilroy-Silk, Robert


Cocks, Michael (Bristol S)
Fowler, Gerald (The Wrekin)
Kinnock, Neil


Cohen, Stanley
Fraser, John (Lambeth. N'w'd)
Lambie, David


Coleman, Donald
Freeson, Reginald
Lamborn, Harry


Colquhoun, Mrs Maureen
Garrett, John (Norwich S)
Lamond, James


Concannon, J. D.
Garrett, W. E. (Wallsend)
Leadbitter, Ted


Cook, Robin F. (Edin C)
George, Bruce
Lee, John


Corbett, Robin
Gilbert, Dr John
Lestor, Miss Joan (Eton &amp; Slough)


Craigen, J. M. (Maryhill)
Ginsburg, David
Lewis, Arthur (Newham N)


Cronin, John
Golding, John
Lewis, Ron (Carlisle)


Crosland, Rt Hon Anthony
Gould, Bryan
Lipton, Marcus


Cryer, Bob
Gourlay, Harry
Litterick, Tom


Cunningham, Dr J. (Whiteh)
Grant, George (Morpeth)
Loyden, Eddie


Dalyell, Tam
Grant, John (Islington C)
Luard, Evan


Davidson, Arthur
Grocott, Bruce
Lyon, Alexander (York)







Lyons, Edward (Bradford W)
Pavitt, Laurie
Strang, Gavin


Mabon, Dr J. Dickson
Peart, Rt Hon Fred
Swain, Thomas


McCartney, Hugh
Pendry, Tom
Taylor, Mrs Ann (Bolton W)


McElhone, Frank
Perry, Ernest
Thomas, Jeffrey (Abertillery)


MacFarquhar, Roderick
Phipps, Dr Colin
Thomas, Ron (Bristol NW)


Mackenzie, Gregor
Prentice, Rt Hon Reg
Thorne, Stan (Preston South)


McMillan, Tom (Glasgow C)
Prescott, John
Tierney, Sydney


Madden, Max
Price, C. (Lewisham W)
Tinn, Jamas


Magee, Bryan
Price, William (Rugby)
Tomlioson, John


Mahon, Simon
Radice, Giles
Torney, Tom


Marks, Kenneth
Rees, Rt Hon Merlyn (Leeds S)
Urwin, T. W.


Marquand, David
Richardson, Miss Jo
Varley, Rt Hon Eric G.


Marshall, Dr Edmund (Goole)
Roberts, Albert (Normanton)
Wainwright, Edwin (Dearne V)


Marshall, Jim (Leicester S)
Roberts, Gwllym (Cannock)
Walden, Brian (B'ham, L'dyw'd)


Mason, Rt Hon Roy
Robertson, John (Paisley)
Walker, Harold (Doncaster)


Meacher, Michael
Roderick, Caerwyn
Walker, Terry (Kingswood)


Mellish, Rt Hon Robert
Rodgers, George (Chorley)
Watkins, David


Mendelson, John
Rodgers, William (Stockton)
Watkinson, John


Mikardo, Ian
Rooker, J. W.
Weetch, Ken


Millan, Bruce
Roper, John
Weitzman, David


Miller, Dr M. S. (E Kilbride)
Rose, Paul B.
Wellbeloved, James


Miller, Mrs Millie (Ilford N)
Ross, Rt Hon W. (Kilmarnock)
White, Frank R. (Bury)


Mitchell, R. C. (Soton, Itchen)
Rowlands, Ted
White, James (Pollok)


Molloy, William
Ryman, John
Whitehead, Phillip


Moonman, Eric
Sandelson, Neville
Willey, Rt Hon Frederick


Morris, Alfred (Wythenshawe)
Sedgemore, Brian
Williams, Alan (Swansea W)


Morris, Charles R. (Openshaw)
Selby, Harry
Williams, Alan Lee (Hornch'ch)


Morris, Rt Hon J. (Aberavon)
Shaw, Arnold (Ilford South)
Wlliams, Rt Hon Shirley (Hertford)


Mulley, Rt Hon Frederick
Sheldon, Robert (Ashton-u-Lyne)
Williams, W. T. (Warrington)


Newens, Stanley
Silkin, Rt Hon John (Deptford)
Wilson, Alexander (Hamilton)


Noble, Mike
Silverman, Julius
Wilson, Rt Hon H. (Huyton)


Oakes, Gordon
Skinner, Dennis
Wilson, William (Coventry SE)


Ogden, Eric
Small, William
Wise, Mrs Audrey


O'Malley, Rt Hon Brian
Smith, John (N Lanarkshire)
Woodall, Alec


Orbach, Maurice
Snape, Peter
Woof, Robert


Ovenden, John
Spearing, Nigel
Wrigglesworth, Ian


Owen, Dr David
Spriggs, Leslie
Young, David (Bolton E)


Padley, Walter
Stallard, A. W.



Palmer, Arthur
Stewart, Rt Hn M. (Fulham)
TELLERS FOR THE NOES:


Park, George
Stoddart, David
Mr. Thomas Cox and


Parker, John
Stott, Roger
Miss Betty Boothroyd.


Parry, Robert

Question accordingly negatived.

Clause 5 ordered to stand part of the Bill.

[Mr. OSCAR MURTON in the Chair]

Clause 14

TRADE UNIONS

Question proposed, That the clause stand part of the Bill.

9.45 p.m.

Mr. Robert Carr: It is astonishing that the Government presume neither to move nor to argue in any way a clause of this kind. When one thinks of what is at stake and the very strong views aroused in the House and felt by the majority of the last Parliament, the thought that the Government should imagine that they will achieve this clause without in any way attempting to justify it is hitting a new low, even for them.
We must oppose this clause, and we intend to ask the House to reject it, because its effect is to give certain trade unions unfairly privileged treatment over

all other taxpayers. The clause proposes to do so by retrospectively refunding £10 million of tax paid by the unions concerned because—and only because—they deliberately chose as part of a political campaign to refrain from taking any of the courses of action properly provided for them had they wished to protect their provident funds from this tax.
I know of no precedent for retrospective legislation designed to relieve a taxpayer of a burden which he could have avoided by his own action but which he consciously chose not to avoid.
As with Clause 5, this is a case of the Government returning to a proposal which they introduced during the last Parliament but upon which they were defeated by the will of the majority of the last House of Commons. As a result of that defeat on 16th July last, the Government introduced an amended version of their proposal, which removed the objectionable retrospective element. Let me stress that it is only the retrospective element which was, and still is, objectionable.
The revised proposal, which removed the retrospective element, was accepted


by the House without any objection. Having reached that unanimous agreement in July, the Government should have left the matter there and not revived it today. To revive and force through a proposal for retrospective action which is against the will of Parliament, expressed as recently as July last after several very full debates, is both shabby and wrong. It is an unnecessary and deliberate provocation. It has no justification in terms of merit or fair treatment for those concerned. On the contrary, it is an act of unfairness against all other taxpayers. Why should the general body of taxpayers be asked to pay back to trade unions £10 million which they chose to expend in support of a political campaign?
The unions had a perfect right to expend this amount of money if they believed that it was in their members' interests. But they have no right to expect the general body of taxpayers to repay it to them now, and it is grossly improper for a Government who are supposed to govern on behalf of all the people and on behalf of all sections of the community to attempt to force the rest of the taxpayers to pay out this sum. In fact, it is nothing more than a payment of Danegeld which should be, and I hope will be, resisted and rejected.
Let me briefly recall the history of this affair, which is part and parcel of the trade unions' campaign against the Industrial Relations Act. It has long been accepted in this country, and rightly so, that the provident funds of unions should be relieved from tax. There is no argument about that. As the Secretary of State for Employment at the time, I made it quite clear that it was not the intention that this relief should be taken away by the Industrial Relations Act.
There were two ways in which unions could have protected their provident funds against the tax which they subsequently paid. The first, and the easiest way was registration. I say in passing that a new form of registration, as a condition of a union obtaining its special rights and privileges, was not some Tory invention. It was proposed unanimously by the Donovan Commission, which had trade unionists among its members, and it was also put forward by the Labour Government in 1969. So registration was

the first, the easiest and the automatic way of protecting the provident funds of these unions.
As we realised and always made clear, however, unions had a perfect right not to register if they so decided. I made it clear that I wanted to be sure that if a union exercised its right not to register, however misguided I might think that was on general public grounds and on general union grounds, it should have available to it some other means of protecting its provident funds from taxation. I took the most careful legal advice on the matter, and I advised the House on a number of occasions, the first time on 23rd March 1971, that the alternative way of doing it was by
… hiving off its provident funds … into separate organisations, registering them as friendly societies …"—[Official Report, 23rd March 1971; Vol. 814, c. 326.]
I recognised that this second method would not always be easy and quick and might be considerably difficult and inconvenient. But, having taken the most careful legal advice, I was satisfied that it was a feasible and practical method. But, because it might be difficult and because it might take time, the Conservative Government in the 1971 Finance Act gave the unions a whole year in which to make the necessary arrangements. I felt that it would involve them in taking legal advice and in making what could be quite complicated legal arrangements and that it was fair and right that additional time should be given. That is why the Conservative Government gave that additional year for the unions to have a proper chance to make the necessary arrangements.
After full debates in another place and after many consultations in another place with my noble Friend who was then Lord Chancellor and with Lord Diamond, who met our legal advisers and the unions' legal advisers to discuss this matter, it was also clearly understood that if the unions tried to hive off their provident funds in the way suggested and found it in practice impossible to do so the Conservative Government would consider finding alternative methods. But no union ever came back to me while I was still Secretary of State for Employment, or to either of my successors in the Conservative Government, to say it had tried and had found that the legal advice that


I had been given, and had accepted, was in practice wrong and incapable of achievement and, therefore, to ask me whether I would provide another way of honouring my promise. Had any single union come forward to me or my successors at that time with evidence that it had tried to use the method I had suggested and found it impossible to do so, I or my successors would, of course, have felt an obligation to find a remedy.
The fact is that the unions did not do so. Neither any individual union nor the TUC collectively came forward to the Conservative Government to say "We have tried. Our legal advice was right. Your legal advice was wrong, and, therefore, will you please honour your undertaking by finding another method?" At no time was that done by any union individually or by the TUC collectively. I suggest that the only conclusion that can be drawn from this is that the unions which decided not to register did not attempt to protect their provident funds in any other way as a deliberate choice of their own, for their own reasons. I believe those reasons were that they felt that to pay tax on their provident funds and to allege that they were having to do so because of the Industrial Relations Act would stimulate the pressure of opposition to the Act among their members and among others in a larger circle.
I am not saying that that was an improper thing to do if the unions believed that that was in their members' interest. I believe that that is the only interpretation that can be put on the unions' failure to try to use the method provided and if they found it would not work to come forward to the Government and say they had tried and failed and ask for an alternative.

The Prime Minister (Mr. Harold Wilson): The right hon. Gentleman having referred to unions which did not register, will he now refer to the situation that is facing the country with the threat of an imminent lock-out in the whole newspaper industry because of a union which did register because of which it is not possible to reach an agreement now? Is he aware that the National Graphical Association did register and left the TUC, and that, whereas all the other print unions are being guaranteed by the TUC at this time, the NGA is separate, and that the reason it registered was the right hon.
Gentleman's legislation, because it had very large welfare funds and wanted to ensure that under his legislation it was safe. Responsibility for the present grave crisis in the newspaper industry—this is supported by many of the newspapers—lies in the fact that the right hon. Gentleman forced that union into registering and leaving the TUC.

Mr. Carr: I am not sure whether that is in order under this clause. If it is, I will willingly enter into debate with the Prime Minister on it, but what he is saying is complete nonsense. It is not a fact. If all unions had registered, as the Prime Minister himself said they should in 1969, this would not have arisen. The Prime Minister's White Paper In Place of Strife made registration a condition of achieving trade union status and the rights, obligations and privileges that go with it, as did the Donovan Commission. The Prime Minister knows that quite well. He cannot deny it, because when we debated this matter in July I quoted paragraph by paragraph from his then Government's White Paper In Place of Strife to prove the point I am now making. How ever, that is irrelevant.

The Prime Minister: It is very important.

10.0 p.m.

Mr. Carr: It may be very important and we could have another debate about it and I could prove that the Prime Minister is talking irresponsible nonsense, but it is nothing to do with this matter of the retrospective repayment of money paid deliberately and properly by unions when they need not have done so. The unions need not have paid this tax, but they did so deliberately because they deliberately failed to try to use the methods which were provided and they deliberately did not take up the offer which was made to them that if they were to try and were to find that the advice we had been given was wrong and that they could not hive off their funds to protect them they should come and discuss the matter with us.

Mr. Norman Atkinson: May I refresh the right hon. Gentleman's memory as to what his right hon. and learned Friend the then Solicitor-General said when talking about the retrospective possibilities of some situation arising such


as a trade union deciding not to register and then subsequently becoming convinced that it was in the interests of its members to do so and reversing its policy? The words stated in Hansard are that the Solicitor-General then made the promise to the House of Commons that the then Government would retropsectively compensate those unions and find means whereby it was possible to do that. That is the promise that this Government are now carrying out.

Mr. Carr: indicated dissent.

Mr. Atkinson: The right hon. Gentleman shakes his head, but if he looks at Hansard he will see that a very clear promise was made by the then Solicitor-General that these funds would be returned to the unions retrospectively if they subsequently changed their minds and decided to register.

Mr. Carr: If the hon. Gentleman would care to give the Hansard reference, my right hon. Friend the Member for Lowestoft (Mr. Prior) will look it up and reply to the point later. I know that I was Secretary of State for Employment at the time, the Minister responsible. I know the promises that were made to the House of Commons and to the unions. I know that they were kept. I know that the unions did not take up the offer of trying to use the method that I had been advised was feasible. I repeat that I took the most careful and full legal advice before I advised the House of Commons that the method was feasible.
I also made it clear, following the further representations while the Bill was being dealt with in another place, that if, in spite of the advice which I had had and which the Government had accepted, the unions found in practice that they could not protect their funds in the way suggested, we could consider alternative methods. I repeat that that offer was never taken up either by any union individually or by the trade union movement collectively.
I repeat that I believe that the only reason for that can have been that the unions felt that to pay this tax out of their provident funds would support the political campaign that they were then waging. Indeed, the only other reason

for their not attempting to protect their funds in the way suggested can have been gross carelessness and negligence on the part of the unions in safeguarding their members' funds. I certainly do not believe it was that, because I know that unions are not grossly careless and negligent in protecting their members' funds. What other reason could there have been? It was either carelessness and negligence or it was the deliberate refraining from taking the measures which were open to them and, if they found that they did not work, coming back to the Government and taking up their offer to reconsider the matter and to find other ways.
Had any union come to the Government and said "We have tried but we have failed to protect our funds in the way advised and we, therefore, ask you to honour your promise to find other means such as setting up a special register quite apart from the main register under the Industrial Relations Act". and had the then Conservative Government refused to do so there might have been a case for this retrospective action.
That as a matter of hard historical fact is not what happened. There is no evidence to suggest that the unions which paid this tax made any serious effort to relieve themselves of the burden. It is a confirmation of that that they did not make any approach to me or my successors on the ground that the methods we had provided had proved impossible of achievement in practice. We must conclude that the unions paid this tax deliberately as a matter of policy for their own purposes, and, therefore, they have no right to ask the taxpayers to repay it. I ask the Committee to reject this clause as a shabby, dishonourable proposal.

Dr. Gilbert: I was expecting that there would be more enthusiasm on the part of Conservative Members to follow the right hon. Member for Carlshalton (Mr. Carr) in his discourse. However, as we noticed during the Committee proceedings on the Finance Bill of last December, despite all his attempts at fiery eloquence he singularly failed to get his colleagues to share his cause. Listening to him this evening I do not find that surprising, because his discourse was—[Interruption]—very much in the nature of a mea ex culpa for his—[Interruption]. If the hon. Member


for Sudbury and Woodbridge (Mr. Stain-ton) wishes to intervene I will give way.

Mr. Keith Stainton: I was observing that the hon. Gentleman might just be premature in his remarks. I am simply restraining myself to hear what he has to say in the face of the convincing argument put forward by my right hon. Friend. It is wrong of him to taunt the Committee at this point. It is noteworthy that while some of my hon. Friends were endeavouring to get to their feet to catch the Chairman's eye, no Labour Members rose from behind the Treasury Bench.

Dr. Gilbert: I did not know that the hon. Gentleman had eyes at the back of his head. I was watching carefully and I can assure him that I would not have risen if any Conservative Members had attempted to intervene. However that is a minor point.
The right hon. Gentleman treated the Committee to a mea ex culpa of considerable length. We can understand why he feels the need to do so. The main burden of his thrust was his query why the general body of taxpayers should repay to the unions this sum of £10 million. The answer is quite simple. It is because the general body of taxpayers should never have been subsidised by the provident funds of the unions in the first place. It is the provident funds we are talking about. The right hon. Gentleman talks about the unions as a corporate whole. We are not talking about their political or strike funds. I would not have thought it was necessary to repeat that, but it seems to be. The provident funds were liable for this £10 million.
These funds are available for payments, as authorised under the registered rules of the trade unions, to a member out of work through sickness or incapacity through personal injury—this does not include strike or lock-out payments—to a member by way of superannuation, to a member who has met with an accident, to a member who has lost his tools by fire or theft or for the funeral expenses on the death of a member of his wife, or as provision for the children of a deceased member.
I am sure that all these matters are familiar to the right hon. Gentleman. What we are talking about is not an

attempt by the Labour Party to pay Danegeld to reimburse the trade union movement with political funds to put it in a better position to carry on strikes or such other activities as might not commend themselves to Conservative Members. We are talking about the legimate ability of the unions to service their members in cases of distress. The right hon. Gentleman is fully aware of that.
The Clause restores to the trade union movement the provident benefit income exemption for the period from 6th April 1972 to 15th September 1974 for various categories, to trade unions which deregistered under the Industrial Relations Act, to new unions that were not involved, and newly amalgamated unions formed after 30th September 1971 which did not register under the Act. It also secures relief for those trade unions which ceased to exist after the coming into effect of that Act as the result of subsequent amalgamations.
The right hon. Gentleman has taken his stance against retrospection. In reply to my right hon. Friend the Chancellor of the Exchequer, he said:
no one likes retrospective legislation but it is justifiable when it is introduced to right a wrong which it was never intended should be inflicted.

Mr. Neville Sandelson: That is all there is to it.

Dr. Gilbert: I am glad to hear my hon. Friend the Member for Hayes and Harlington (Mr. Sandelson) endorse that view.
I could go on at length quoting the debates that took place earlier this year on a similar provision, but I cannot see that there is any profit to the Committee in going over the details of the argument.

Mr. Lawson: When the Financial Secretary made that quotation he should have pointed out that my right hon. Friend the Member for Carshalton (Mr. Carr) was quoting with approval what the Prime Minister said.

Dr. Gilbert: That is right. I shall quote the right hon. Member for Carshalton further. This is the right hon. Gentleman's own language:
I accept that test as one which might well justify the exceptional measure of retrospective legislation. Speaking for myself, the answer


to the right hon. Gentleman is "Yes"."—[Official Report, 19th June 1974; Vol. 875, c. 512.]

Mr. Robert Carr: I have said tonight that if this burden had been inflicted on the unions and they could not have avoided it there would have been a case for retrospection. The whole tenor of my argument tonight, as it was then, is that the means of avoiding this burden were provided for the trade unions and they deliberately did not take advantage of them; nor did they take up the alternative offer of saying to the Government, "We cannot use this method; find us another one".

Dr. Gilbert: The right hon. Gentleman is not uninformed about these matters, and is normally quite fair, but he is perfectly well aware that the course open to the trade unions, which was to set up a separate friendly society fund for their provident fund, was discussed by the two unions and discussed with the General Council of the TUC. Legal advice was taken, and it was found not to be practicable in the case of those unions. It is simply not the case that the trade union movement, frivolously, did not avail itself of opportunities freely open to it to take advantage of an easy way out of an unjust situation—which I acquit the right hon. Gentleman of intending.

Mr. Robert Carr: In the July debate we asked for such evidence and it was not given. Will the Financial Secretary tell us to which two unions he is referring, and when? What were the difficulties? Was any approach made to the Government to fulfil their promise to provide an alternative method if the method suggested proved to be no good?

10.15 p.m.

Dr. Gilbert: The right hon. Gentleman forces me to quote in extenso from my right hon. Friends the Chancellor of the Exchequer and the Secretary of State for Employment, and no words of mine could improve on theirs. I quote what was said by the Secretary of State for Employment when discussing a solution put forward by the Liberal Party, which is tonight conspicuous by its absence. My right hon. Friend said:
The conclusion was that the friendly society solution would secure fairly comprehensive tax protection but would create severe administrative

difficulties …".—[Official Report, 19th June 1974; Vol. 875, c. 603.]
My right hon. Friend then set out the four points, and they are all listed in that column. Does the right hon. Gentleman want me to read them to the Committee?

Mr. Robert Carr: Will the hon. Gentleman say which unions did this and whether, having done it, they asked the Government of the day to honour the promise and to provide an alternative method?

Dr. Gilbert: The right hon. Gentleman knows perfectly well that two trade unions made an approach.

Mr. Robert Carr: Which are they?

Dr. Gilbert: They approached the Registrar of Friendly Societies.

Mr. Stainton: On a point of order. Sir Oscar. It is appropriate in a debate of this importance that reference should be made to two unions having taken certain steps without the Minister responsible being prepared to disclose for the record their names?

The Temporary Chairman: That is not a matter for the Chair.

Dr. Gilbert: I am merely quoting in extenso from my right hon. Friend the Secretary of State for Employment.

Mr. Robert Carr: Give the names.

Dr. Gilbert: I was saying that two unions made an approach to the Registrar of Friendly Societies. The right hon. Gentleman is well aware of that. The answer which they received was very much on the lines of the answer which the TUC had already received. The practical obstacles to following this supposed solution were theoretical and would never have been implemented. The sort of legalistic and pedantic statements which have been made are uncharacteristic of the right hon. Gentleman. It shows that he must have an extremely guilty conscience in this matter. I would normally acquit him of insensitivity. It shows how he fumbles for a technical, bureaucratic excuse for the course of combat which he pursued. He is aware that the practical difficulties in the way of implementing such a solution stopped the trade union movement taking the course he suggested.

Mr. Hordern: The Minister complained that the trade unions were forced through their provident funds to pay the sum of £10 million in tax. Will he tell the Committee whether, if the clause is passed, that £10 million will go to the provident funds of the trade unions or to the trade unions themselves?

Dr. Gilbert: The intention of course is that it should go to the provident funds of the trade unions. As I was saying, I acquit the right hon. Member for Carshalton of any criminal intent. I accept that it was an original error. I accept that the then Conservative Government did not intend the trade unions to lose the relief and that it is that unintended result of the Industrial Relations Act which we are now debating.
The Times published a leader on this subject on 24th April 1974, and whatever else one may say about that newspaper it is not notably susceptible to the views of the Labour Party or of the trade union movement on the subject of industrial affairs, and is more likely to adopt the view of the right hon. Member for Carshalton. In that leader The Times said—and these are important words because they come from a relatively impartial source—
If it is said that the income from funds which deserve to have charitable status were made liable to tax either by inadvertence or on false principles, it cannot be very wrong to correct the error with effect from the time the error was committed.
That is the whole burden of our case.
I acquit the right hon. Gentleman of evil intent, but he stands convicted out of his own mouth of deliberately persisting in error and injustice long after the point of that error and injustice had become clear to the victims, long after the matter had become clear to objective observers such as The Times—and, indeed, right up to the time of this debate, when the right hon. Member for Carshalton, as one of the principal authors of

that error and injustice made his view known.
The act of deregistration under the Industrial Relations Act 1971 was within the law. There was no need for new unions to register. Everything that they did was legal. We are determined to restore the tax relief which was denied to them as a result of what can only be described as a bureaucratic blunder by the right hon. Gentleman, whose concern for his own face has made it impossible for him to acknowledge. I am delighted to commend the clause to my right hon. and hon. Friends.

Mr. Robert Carr: Before the hon. Gentleman sits down, may I ask how he accounts for the fact that when the unions were told that if the legal advice that we had been given proved to be wrong they could come back to us and ask for an alternative method to be found, they did not do so? How can the hon. Gentleman now accuse us of deliberately causing this payment of tax? The advice that he quoted from the TUC was not given after any union had tried to do that. It was given in July 1971, as his right hon. Friend the Secretary of State for Employment made clear on 19th June, and a further two and a half years went by without any single union or the TUC collectively coming and saying to us "This was a bureaucratic mistake", or whatever the hon. Gentleman likes to call it, "so will you honour your promise to find an alternative method?" They did not do that.

Dr. Gilbert: I really am surprised at the right hon. Gentleman if he is reduced to taking that stand. Is he suggesting that he never knew because nobody told him during that time? He and his hon. Friends can read. The situation was known to him. It is absolutely disingenuous of him to pretend that he did not have prime responsibility in this matter and could not have dealt with it at any time that he wished.

Mr. Leon Brittan: Mr. Murton, I look forward to the time when I shall be able to address you as Sir Oscar. However, I feel that that honour will be more appreciated when it is properly conferred than when it is given informally by hon. Members.
I should like to consider some of the arguments that have been put forward by the Financial Secretary in favour of this extraordinary provision in the Bill. The hon. Gentleman argued that the general body of taxpayers should never have been subsidised, as he put it, by the provident funds of the trade union movement. In support of that argument he gave us a heartrending account of the purposes to which the trade union movement's provident funds were put.
We are all familiar with those purposes. I am sure that many hon. Members on this side of the Committee and many people in the country would feel that if the purposes of the trade union movement's provident funds were as beneficient, desirable and charitable as were described by the hon. Gentleman, it was all the more important that those responsible for those funds should have taken the necessary steps to ensure that they were not met by tax liabilities that could readily have been avoided if the unions had taken the action of registering under the Industrial Relations Act 1971.

Mr. Sandelson: Will the hon. Gentleman tell the Committee straight out whether it is his belief now that those funds should be irrevocably forfeited by the trade unions?

Mr. Brittan: I have no hesitation in saying that I definitely wish that to happen. It is not the responsibility of the country, of the House of Commons or of the Government to ensure that funds albeit for charitable purposes, are maintained intact if the people responsible for those funds did not take the steps which they knew were open to them to make sure that those funds stayed intact.
The argument for this retrospection is fallacious and rests on the claim that special circumstances are involved—that it was found not to be practicable to take the alternative steps which were open to

the unions. We have not been given the names of the two unions concerned, in spite of repeated requests. We have not been able to examine whether it was truly impracticable. There has been no answer to the point that the unions could have applied to the then Secretary of State for action to be taken.
So it is not right to say that this retrospection is justified just because this wrong was never intended. It was never intended, but it could always have been avoided.

Dr. Gilbert: The hon. Gentleman says that at no time were the practical effects acknowledged by the previous Government—I would not go so far as to say that they were not known. I call his attention to column 1425 of the Official Report for 10th July 1973, a year earlier than the last debate. The then Minister of State, Treasury said:
I realise that there are practical difficulties in some cases in that for these purposes provident funds have to be alienated from the main union funds … I am, therefore, aware that what I am now suggesting cannot apply or appears not to apply in every case.—[Official Report, 10th July 1973; Vol. 859. c. 1425.]
If it was clear to the Minister of State, surely to Heaven the right hon. Gentleman would have known about it.

Mr. Brittan: That was in 1973. We were talking about 1971 earlier. I was going on to say that even if last July arguments commended themselves to hon. Members opposite for this extraordinary course, circumstances have changed and it is much less desirable than it was even last July.
The changed circumstances are the deterioration in our economic situation. One is entitled to ask what priority, if any, should now be given to restoring this sum to the funds of the unions which could, if properly managed, have kept the money. I maintain that no priority should be given to that expenditure.
Examples have been given tonight of meritorious classes of people who are genuinely suffering from the Government's tax provisions and in respect of whom the Government say that they cannot afford any relief. This limited supply of money could be readily diverted to the aid of such people.
If we are to resolve our economic difficulties, we must unite the nation by following policies not based on class considerations but genuinely designed to deal with the problems. A purely class provision at this time, introduced because of the pressure of the trade union movement, will set back the cause of national unity, which is the only way of dealing with our grave problems.

10.30 p.m.

Mr. John Tomlinson: I propose to occupy about two minutes of the time of the Committee as I believe it is important to debate issues of principle without necessarily being intimidated by anybody in so doing.
A number of important issues have to be stated in this debate. One of them is in response to the right hon. Member for Carshalton (Mr. Carr) who said that his door was always open. That is precisely the same right hon. Gentleman who, when we had a consultative document on the Industrial Relations Bill, said that he was prepared to consult only on detail and not on principle. That is the kind of consultation that we learned to expect from him before the Industrial Relations Act was placed on the statute book. He said that provision was made by him to allow the unions to find a way round a problem with which he did not intend to confront them in the first place.
The legal advice that was given to the Trades Union Congress was abundantly clear, and, on the basis of the legal advice that the TUC took, it had to advise its affiliated unions that the only way to get round the obstacle that the right hon. Member for Carshalton had put in their way was totally to hive off their friendly society activities. That would have meant separate contributions, separate accounting systems and separate management of those systems, and the individual in each case would have had to determine whether he wanted to hive off or not. It would have been necessary to have duplicate systems for those parts of the unions where this hiving-off process took place and for those parts where it did not take place.
It is nonsense for the right hon. Gentleman to say that he had found a solution. To say that he had offered to keep his door open if there were any insurmountable difficulty is to add insult

to injury, when right at the beginning of the whole argument he made it abundantly clear that he was interested in consulting only about detail and not principle.

Mr. Mayhew: The Opposition have tried this evening to obtain some relief for some carefully selected categories of persons from the additional taxation that the Government and this Bill will heap upon them. They include the elderly retired, the disabled, and widows with children.
The Chief Secretary, earlier this evening, in rejecting these efforts, complained of our order of priorities. He complained that we would spend £53 million on Dives who has £30 a week of savings income, while neglecting Lazarus who has no savings income because he never intended to save a penny in his life.
In vain it was pointed out to the Chief Secretary that he was not being invited to spend any money, that he was merely being pressed to refrain from taking it. The Government cannot complain if that coinage is now returned to them. What sense of priority is it that leads to £10 million being spent not on the weakest but on the most powerful entities in the land—the trade unions? The elderly retired, the worn out, the widows and the disabled are, with a sneer, sent empty away. I shall say what order of priorities it is. It is the order of priorities of a Government whose vaunted compassion is bogus, and whose credo it is that might is right.

Mr. Peter Rees: If permitted to do so, I shall intervene briefly.
However much the Financial Secretary tries to obscure it in a mass of verbage and misleading analogies, the issue of the debate is very simple and can be reduced to the following propositions. The provident funds of the trade union movement were specially privileged in that their income attracted relief from tax. Yet that privilege was to be perpetuated, provided that the trade unions concerned registered under the Industrial Relations Act. Many, but not all, trade unions, for reasons quite unconnected with tax, and indeed for reasons probably unconnected with the long-term interests of their members, declined to register. They must take the consequences of that decision.
There is no constitutional precedent for this retrospective relief. The clause in which it is embodied is a squalid political job and should be recognised as such. Like my hon. and learned Friend the Member for Royal Tunbridge Wells (Mr. Mayhew), if there is £10 million of our money available for relief, I could think of many worthier beneficiaries.

Mr. Lawson: I shall be brief in what I have to say. I want to set the record straight. We have heard a most shabby defence from the Financial Secretary. He first tried to support his threadbare case by quoting something which he claimed had been said by my right hon. Friend the Member for Carshalton (Mr. Carr). When I looked up the quotation in the Official Report I discovered that my right hon. Friend was not uttering his own words but was quoting something the Prime Minister had said. In reply to my intervention the Financial Secretary read out a further passage from the Official Report ending with the answer "Yes". I looked that up, too, and I found that my right hon. Friend was replying to a hypothetical question from the Chancellor of the Exchequer which my right hon. Friend went on to explain, did not apply in this particular case. The whole point by the Financial Secretary is therefore nonsense.
Finally, I shall demolish the argument that all the money will go to provident funds of trade unions. That is manifest nonsense because, as is well known, many unions do not have separate provident funds and therefore in such cases the money must go into their general funds.

Mr. Atkinson: I intervened briefly earlier, but merely to comment on complaints by Conservative Members that in refunding the money precedents were being created which were against the taxpayers' interests. I sought to refresh the memory of the right hon. Member for Carshalton (Mr. Carr) by referring to the remarks in the debate in Committee on the Floor of the House by the then Solicitor-General, the right hon. and learned Member for Surrey, East (Sir G. Howe) on 9th and 10th February 1971. I shall not go over all the arguments that took place during those two days. I shall merely say that I asked the right hon. and learned Gentleman whether a union,

having decided not to register but subsequently deciding to do so, could recoup its retrospective losses by registering.
The right hon. and learned Gentleman said that a union could immediately recover on registration
or continue, all the benefits currently available under the Incomes and Corporation Taxes Act, 1970, in respect of provident society funds, which is what it now enjoys.
He went on
Under the 1871 Act, registration enables a trade union to enjoy the benefits of a friendly society in respect of provident funds ".—[Official Report, 10th February 1971; Vol. 811, c. 660.]
The right hon. and learned Gentleman said that a union could recover retrospectively. In other words he was saying that the Government of the day would ensure that the trade union did not suffer by its single act of non-registration if subsequently it decided to register.
The Government then gave the assurance that, retrospectively, they would ensure that the trade union did not lose. That is why I intervened. If the right hon. Gentleman looks at Hansard he will see that the Government said that the trade union concerned could recover the funds.

Mr. Robert Carr: I am sorry if I misunderstood the hon. Gentleman. My right hon. and learned Friend who was then Solicitor-General was describing what would happen if a union that had first decided not to register, subsequently decided to register. That is quite clear, and I agree with it. What I was also saying, however, was what would happen to a union which decided not to register and remained firm in its decision.

Mr. John Mendelson: Just vindictive.

Mr. Carr: It is not vindictive at all, because we were saying that if a union subsequently decided to register it could recover in the way my right hon. and learned Friend described. On 23rd March 1971 I described what would happen if a union maintained its decision not to register. I said:
I assure the House that if it were necessary to set up a special register for trade unions which wished not to register in the industrial relations sense, so that they could continue the other half of their activities, their provident fund activities, I would propose a special register. But it is not necessary. I have gone into this most carefully. I am told


that there is no technical, constitutional or legal difficulty. I am assured on technical advice that the Industrial and Provident Societies Act, 1965 or the Friendly Societies Act 1896 is available "—[OFFICIAL REPORT, 23rd March 1971; Vol. 814, c. 335.]
Those Acts were available to trade unions to hive off their funds. In that way they could protect them from tax, which some trade unions have always done.

Mr. Atkinson: It follows that the right hon. Gentleman is still in sympathy with what his right hon. and learned Friend said when he promised that unions could recover if they subsequently changed their earlier decision. If the 1971 Act were still in existence, would the right hon. Gentleman still intend to honour the pledge and not harm the trade unions, allowing them retrospectively to recover the funds they originally lost—funds which the right hon. Gentleman now suggests they could have if they then registered?

Mr. Carr: I told the House then—and, to use the hon. Gentleman's words, I am still in sympathy with what I said—that I wished that trade unions which decided not to register should protect their funds. I took careful advice that there was a means by which they could do that. I still believe that those were valid means. If the unions found that, contrary to the advice I had received, they were not practicable means, they could and should have asked me or my successors to make a special register, such as I have just mentioned. They did not do so. If we had remained in power, and, therefore, the Act had remained on the statute book, and if they had subsequently made that request, I should have honoured my promise.

Mr. Sandelson: If we had another Tory Government which introduced a similar Act with the same measures, and then invited the trade unions to register, would the right hon. Gentleman concede that they should retrospectively recover those lost funds? If not, does it not seem to the right hon. Gentleman that there is a total lack of principle in the arguments that he is advancing?

10.45 p.m.

Mr. Robert Carr: There is no lack of principle. In my view, and in the view of many hon. Members not of my party, the unions deliberately refrained from

seeking to protect their funds, as part of their political campaign. They were entitled to take such a decision. What they are not entitled to do is to expect the general body of taxpayers to pay for their political campaign.

Mr. James Prior: I do not want to curtail the debate. I think that my right hon. and hon. Friends are glad to see Labour Members rising in their places and taking part in it. We do not mind how long it lasts. However, we think that this is one of the more irrelevant of the Government's gestures. It takes place in an atmosphere different from that which prevailed during the debate of 19th June. At that time the Chancellor and the Secretary of State for Employment told us of the wickedness of the Industrial Relations Act. They said that if we repealed that wicked Act everything would be sweetness and light amongst the trade unions. They said that the sooner we paid the £10 million the better.
But the Government were not prepared to accept the will of the House on that occasion. They bring this matter back again in a rather shabby form. What has happened in the meanwhile? The Government may have won one election. Of course, we all know the extent of the bribes that were made to allow them to do so. The fact is that the economic situation has worsened. For the benefit of Labour Members I shall refer to the strike position since the election.

Mr. Tomlinson: What has that to do with it?

Mr. Prior: We were told that such matters were part of the social contract, the purpose of which was to create sweetness and light in the trade union movement. If that was not the purpose I do not know what was. The provisional figure of working days lost from 1st April to 30th November 1974 is 7,391,000. That represents a 158 per cent. increase compared with the figure for the comparable period of 1973.
My hon. and learned Friend the Member for Royal Tunbridge Wells (Mr. Mayhew) and my hon. Friend the Member for Cleveland and Whitby (Mr. Brittan) have pointed out what could be done with the £10 million. I shall give the House a few examples. It could


have been spent in improving or replacing about 80 outdated primary schools. It could have provided nursery education for 70,000 children for one year. It could have provided cars for disabled persons in place of three-wheelers. It could have built a medium-sized district hospital. That is what we are talking about, and that is another of the objections that we have to this measure.
The present situation is a radical change. We recognise only too well that the Left wing is making a lot of noise tonight as it knows perfectly well—

Mr. John Mendelson: Withdraw. Does the right hon. Gentleman claim that my hon. Friend the Member for Hayes and Harlington (Mr. Sandelson) is a member of the Left wing?

Mr. Prior: In the case of the hon. Member for Hayes and Harlington (Mr. Sandelson), a notable exception, I withdraw. The hon. Member for Penistone (Mr. Mendelson) knows that this is the last bone which we shall throw to the Left-wing dogs before they once more lose their licences.
Already we know only too well that the Prime Minister, having made a speech to the country, which I fully support, is about to have to talk to the Parliamentary Labour Party about removing licences from dogs which bark again. It is only a matter of time. This is bound to happen. The sooner the Left wing of the Labour Party realises that this is its last opportunity the better it will be for the country as a whole.
The argument tonight is exactly the same as was put forward during the debate on 19th June. We all know that the unions were determined, if they could, to defeat the Industrial Relations Act. They used—it was perfectly legitimate—the excuse of non-registration and the effect that this would have on their provident funds as one of the sticks with which to try to beat the Government. They hoped that this would succeed. In some respects they succeeded beyond their wildest dreams.
The Prime Minister arrived on the scene tonight to make some comment—presumably for tomorrow morning's Press—about the unfortunate dispute now raging over the printing of the newspapers, but he has forgotten all too

quickly exactly what was said in the document "In Place of Strife" in 1969. The Labour Government of that time accepted that unions should register and that a condition of registration should be that:
Unions will be required to have rules governing certain matters. … Refusal will lay a trade union open to financial penalty by the Industrial Board
The Government of the day knew that and the Prime Minister at that time knew exactly what would happen.
The unions knew that if they failed to register they had the alternative of going to the friendly societies and trying to set up a separate fund. We were told tonight that the unions tried to do so. This matter is obscure. We do not know which unions were involved. We do not know how hard they tried. In the debate, the Secretary of State for Employment, when challenged, said:
The right hon. Gentleman says further that there was never any strong challenge, that nobody made representations about it. That is absolutely untrue. Some of my hon. Friends moved a clause as an amendment to last year's Finance Bill."—[Official Report, 19th June 1974; Vol. 875, c. 604.]
That is the sum total of the objections made by the massive trade union movement, with its opportunities and with all the legal advice open to it which it can take when it wishes. All we hear is that two unspecified unions—presumably they were not very large—took a case to the friendly societies but proceeded no further with it. The only lame excuse that the Secretary of State can produce is that the Opposition of the day tried to move an amendment to the Finance Bill. That is the sum total.
Why does not the Government for once come clean with the Committee and admit that they knew that the unions acted as they did solely to try to break the Act, and that that was all they were interested in doing? If this meant that their widows and orphans suffered, they could not have cared a rap about that. That did not concern them. We were challenged on the question whether we thought it was fair that those widows and orphans should go without. That is not our responsibility. That is the responsibility of the unions, which are responsible for the funds. They have the perfect excuse. They had a perfectly logical reason for registering, and if they had done so their funds would have been protected. They


chose not to do so. They having chosen not to do so, it does not lie in the mouths of Government supporters to try to make out a plausible case for why they did not do so.
I add one comment, which is perhaps a more important principle than ever. The unions chose deliberately not to interpret the Act as it should have been interpreted. They chose deliberately not to register. Therefore, they chose deliberately to put their provident funds at risk. So a fresh Government decide that they have to make a retrospective piece of legislation to help them out.

Mr. Rost: A pre-election bribe.

Mr. Prior: As my hon. Friend says—a pre-election bribe, and it is in a retrospective piece of legislation.
We all know the challenges that the law faces at the moment. The problem which Government supporters will not acknowledge is that on some future occasion the case of the £10 million to the trade unions will be quoted as a precedent.

We had an example yesterday, in the case of the Shrewsbury pickets. We had the Prime Minister putting all the blame, as it were, on to his right hon. Friend the Home Secretary. Why do not the Prime Minister and the rest of his Government do what the Secretary of State for Education and Science has done, and stand by the rule of law?

This is just another example of the present Government's trying, by retrospective legislation, to help people who have attempted to defeat the law. That is the principle involved in this issue. It is a shoddy proposal. It is one which should never have been brought back to this House. It is a proposal of which the Government ought to feel thoroughly ashamed. I hope that my right hon. and hon. Friends will vote tonight with an enthusiasm that it may be they have not shown about some other matters. I ask them to show that enthusiasm tonight.

Question put, That the Clause stand part of the Bill:—

The Committee divided: Ayes 277, Noes 247.

Division No. 58.]
AYES
[11.00 p.m.


Allaun, Frank
Cook, Robin F. (Edin C)
Flannery, Martin


Archer, Peter
Corbett, Robin
Fletcher, Raymond (Ilkeston)


Armstrong, Ernest
Cox, Thomas (Tooting)
Fletcher, Ted (Darlington)


Atkins, Ronald (Preston N)
Craig, Rt Hon W. (Belfast E)
Foot, Rt Hon Michael


Atkinson, Norman
Craigen, J. M. (Maryhill)
Ford, Ben


Bagier, Gordon A. T.
Cronin, John
Forrester, John


Barnett, Guy (Greenwich)
Crosland, Rt Hon Anthony
Fowler, Gerald (The Wrekin)


Barnett, Rt Hon Joel
Cryer, Bob
Fraser, John (Lambeth, N'w'd)


Bates, Alf
Cunningham, Dr J. (Whiteh)
Freeson, Reginald


Bean, R. E.
Dalyeil, Tam
Garrett, John (Norwich S)


Benn, Rt Hon Anthony Wedgwood
Davidson, Arthur
Garrett, W. E. (Wallsend)


Bennett, Andrew (Stockport N)
Davies, Bryan (Enfield N)
George, Bruce


Bidwell, Sydney
Davies, Denzil (Llanelli)
Gilbert, Dr John


Bishop, E. S.
Davies, Ifor (Gower)
Ginsburg, David


Blenkinsop, Arthur
Davis, Clinton (Hackney C)
Golding, John


Boardman, H.
Deakins, Eric
Gould, Bryan


Booth, Albert
de Freitas, Rt Hon Sir Geoffrey
Gourlay, Harry


Bottomley, Rt Hon Arthur
Delargy, Hugh
Grant, George (Morpeth)


Boyden, James (Bish Auck)
Dell, Rt Hon Edmund
Grant, John (Islington C)


Bradley, Tom
Dempsey, James
Grocott, Bruce


Broughton, Sir Alfred
Doig, Peter
Hamilton, W. W. (Central Fife)


Brown, Hugh D. (Provan)
Dormand, J. D.
Hamling, William


Brown, Robert C. (Newcastle W)
Douglas-Mann, Bruce
Hardy, Peter


Buchan, Norman
Duffy, A. E. P.
Harper, Joseph


Buchanan, Richard
Dunn, James A.
Harrison, Walter (Wakefield)


Butler, Mrs Joyce (Wood Green)
Dunnett, Jack
Hattersley, Rt Hon Roy


Callaghan, Jim (Middleton &amp; P)
Dunwoody, Mrs Gwyneth
Hatton, Frank


Campbell, Ian
Eadie, Alex
Hayman, Mrs Helene


Canavan, Dennis
Edelman, Maurice
Heffer, Eric S.


Cant, R. B.
Edge, Geoff
Hooley, Frank


Carmichael, Neil
Edwards, Robert (Wolv SE)
Horam, John


Carter, Ray
Ellis, John (Brigg &amp; Scun)
Hoyle, Douglas (Nelson)


Carter-Jones, Lewis
Ellis, Tom (Wrexham)
Huckfield, Les


Cartwright, John
English, Michael
Hughes, Rt Hon C. (Anglesey)


Castle, Rt Hon Barbara
Ennals, David
Hughes, Mark (Durham)


Clemitson, Ivor
Evans, Gwynfor (Carmarthen)
Hughes, Robert (Aberdeen N)


Cocks, Michael (Bristol S)
Evans, Ioan (Aberdare)
Hughes, Roy (Newport)


Cohen, Stanley
Evans, John (Newton)
Hunter, Adam


Coleman, Donald
Ewing, Harry (Stirling)
Irvine, Rt Hon Sir A. (Edge Hill)


Colquhoun, Mrs Maureen
Fernyhough, Rt Hon E.
Jackson, Miss Margaret (Lincoln)


Concannon, J. D.
Fitt, Gerard (Belfast W)
Janner, Greville





Jay, Rt Hon Douglas
Molloy, William
Small, William


Jeger, Mrs Lena
Molyneaux, James
Smith, Cyril (Rochdale)


Jenkins, Hugh (Putney)
Moonman, Eric
Smith, John (N Lanarkshire)


John, Brynmor
Morris, Alfred (Wythenshawe)
Snape, Peter


Johnson, James (Hull West)
Morris, Charles R. (Openshaw)
Spearing, Nigel


Johnson, Walter (Derby S)
Morris, Rt Hon J. (Aberavon)
Spriggs, Leslie


Jones, Alec (Rhondda)
Mulley, Rt Hon Frederick
Stallard, A. W.


Jones, Barry (East Flint)
Murray, Ronald King
Stewart, Rt Hn M. (Fulham)


Jones, Dan (Burnley)
Newens, Stanley
Stoddart, David


Judd, Frank
Noble, Mike
Stott, Roger


Kaufman, Gerald
Oakes, Gordon
Strang, Gavin


Kelley, Richard
Ogden, Eric
Swain, Thomas


Kerr, Russell
O'Malley, Rt Hon Brian
Taylor, Mrs Ann (Bolton W)


Kilroy-Silk, Robert
Orbach, Maurice
Thomas, Dafydd (Merioneth)


Kinnock Neil
Ovenden, John
Thomas, Jeffrey (Abertillery)


Lambie, David
Owen, Dr David
Thomas, Ron (Bristol NW)


Lamborn, Harry
Padley, Walter
Thorne, Stan (Preston South)


Lamond, James
Palmer, Arthur
Tierney, Sydney


Leadbitter, Ted
Park, George
Tinn, James


Lee, John
Parker, John
Tomlinson, John


Lestor, Miss Joan (Eton &amp; Slough)
Parry, Robert
Torney, Tom


Lewis, Arthur (Newham N)
Pavitt, Laurie
Urwin, T. W.


Lewis, Ron (Carlisle)
Perry, Ernest
Varley, Rt Hon Eric G.


Lipton, Marcus
Phipps, Dr Colin
Wainwright, Edwin (Dearne V)


Litterick, Tom
Powell, Rt Hon J. Enoch
Walden, Brian (B'ham, L'dyw'd)


Loyden, Eddie
Prentice, Rt Hon Reg
Walker, Harold (Doncaster)


Luard, Evan
Prescott, John
Walker, Terry (Kingswood)


Lyon, Alexander (York)
Price, C. (Lewisham W)
Watkins, David


Lyons, Edward (Bradford W)
Price, William (Rugby)
Watkinson, John


Mabon, Dr J. Dickson
Radice, Giles
Weetch, Ken


McCartney, Hugh
Rees, Rt Hon Merlyn (Leeds S)
Weitzman, David


McCusker, H.
Richardson, Miss Jo
Wellbeloved, James


McElhone, Frank
Roberts, Albert (Normanton)
White, Frank R. (Bury)


MacFarquhar, Roderick
Roberts, Gwilym (Cannock)
White, James (Pollok)


Mackenzie, Gregor
Robertson, John (Paisley)
Whitehead, Phillip


McMillan, Tom (Glasgow C)
Roderick, Caerwyn
Wigley, Dafydd


Madden, Max
Rodgers, George (Chorley)
Willey, Rt Hon Frederick


Magee, Bryan
Rodgers, William (Stockton)
Williams, Alan (Swansea W)


Mahon, Simon
Rooker, J. W.
Williams, Alan Lee (Hornch'ch)


Marks, Kenneth
Roper, John
Williams, Rt Hn Shirley (Hertford)


Marquand, David
Rose, Paul B.
Williams, W. T. (Warrington)


Marshall, Dr Edmund (Goole)
Ross, Rt Hon W. (Kilmarnock)
Wilson, Alexander (Hamilton)


Marshall, Jim (Leicester S)
Rowlands, Ted
Wilson, Rt Hon H. (Huyton)


Mason, Rt Hon Roy
Ryman, John
Wilson, William (Coventry SE)


Meacher, Michael
Sandelson, Neville
Wise, Mrs Audrey


Mellish, Rt Hon Robert
Sedgemore, Brian
Woodall, Alec


Mendelson, John
Selby, Harry
Woof, Robert


Mikardo, Ian
Shaw, Arnold (Ilford South)
Wrigglesworth, Ian


Millan, Bruce
Sheldon, Robert (Ashton-u-Lyne)
Young, David (Bolton E)


Miller, Dr M. S. (E Kilbride)
Silkin, Rt Hon John (Deptford)



Miller, Mrs Millie (Ilford N)
Silverman, Julius
TELLERS FOR THE AYES:


Mitchell, R. C. (Soton, Itchen)
Skinner, Dennis
Mr. James Hamilton and




Miss Betty Boothroyd.




NOES


Adley, Robert
Bulmer, Esmond
Emery, Peter


Aitken, Jonathan
Burden, F. A.
Eyre, Reginald


Alison, Michael
Carlisle, Mark
Fairgrieve, Russell


Amery, Rt Hon Julian
Carr, Rt Hon Robert
Farr, John


Arnold, Tom
Chalker, Mrs Lynda
Fell, Anthony


Atkins, Rt Hon H. (Spelthorne)
Channon, Paul
Finsberg, Geoffrey


Awdry, Daniel
Churchill, W. S.
Fisher, Sir Nigel


Bain, Mrs Margaret
Clark, William (Croydon S)
Fletcher, Alex (Edinburgh N)


Baker, Kenneth
Clarke, Kenneth (Rushcliffe)
Fookes, Miss Janet


Banks, Robert
Cockcroft, John
Fowler, Norman (Sutton C'f'd)


Beith, A. J.
Cooke, Robert (Bristol W)
Fox, Marcus


Bell, Ronald
Cope, John
Fraser, Rt Hon H. (Stafford &amp; St)


Bennett, Dr Reginald (Fareham)
Cormack, Patrick
Freud, Clement


Berry, Hon Anthony
Corrie, John
Galbraith, Hon. T. G. D.


Biffen, John
Costain, A. P.
Gardiner, George (Reigate)


Biggs-Davison, John
Crawford, Douglas
Gardner, Edward (S Fylde)


Blaker, Peter
Critchley, Julian
Gilmour, Sir John (East Fife)


Body, Richard
Crouch, David
Glyn, Dr Alan


Boscawen, Hon Robert
Crowder, F. P.
Godber, Rt Hon Joseph


Bowden, A. (Brighton, Kemptown)
Dean, Paul (N Somerset)
Goodhart, Philip


Boyson, Dr Rhodes (Brent)
Dodsworth, Geoffrey
Goodhew, Victor


Braine, Sir Bernard
Douglas-Hamilton, Lord James
Goodlad, Alastair


Brittan, Leon
Drayson, Burnaby
Gorst, John


Brotherton, Michael
Durant, Tony
Gow, Ian (Eastbourne)


Bryan, Sir Paul
Dykes, Hugh
Gower, Sir Raymond (Barry)


Buchanan-Smith, Alick
Eden, Rt Hon Sir John
Grant, Anthony (Harrow C)


Buck, Antony
Edwards, Nicholas (Pembroke)
Gray Hamish


Budgen, Nick
Elliott, Sir William
Grieve, Percy







Grimond, Rt Hon J.
McNair-Wilson, P. (New Forest)
Royle, Sir Anthony


Grist, Ian
Madel, David
Sainsbury, Tim


Grylls, Michael
Marshall, Michael (Arundel)
Shaw, Giles (Pudsey)


Hall, Sir John
Marten, Neil
Shelton, William (Streatham)


Hall-Davis, A. G. F.
Mather, Carol
Shepherd, Colin


Hamilton, Michael (Salisbury)
Maude, Angus
Shersby, Michael


Hannam, John
Mawby, Ray
Sims, Roger


Harvie Anderson, Rt Hon Miss
Maxwell-Hyslop, Robin
Sinclair, Sir George


Havers, Sir Michael
Mayhew, Patrick
Skeet, T. H. H.


Hawkins, Paul
Meyer, Sir Anthony
Smith, Dudley (Warwick)


Hayhoe, Barney
Miller, Hal (Bromsgrove)
Speed, Keith


Heath, Rt Hon Edward
Mills, Peter
Spence, John


Henderson, Douglas
Mitchell, David (Basingstoke)
Spicer, Jim (W Dorset)


Hicks, Robert
Moate, Roger
Spicer, Michael (S Worcester)


Higgins, Terence L.
Monro, Hector
Sproat, Iain


Hooson, Emlyn
Montgomery, Fergus
Stainton, Keith


Hordern, Peter
Moore, John (Croydon C)
Stanbrook, Ivor


Howe, Rt Hon Sir Geoffrey
More, Jasper (Ludlow)
Stanley, John


Howell, David (Guildford)
Morgan-Giles, Rear-Admiral
Steel, David (Roxburgh)


Howells, Geraint (Cardigan)
Morris, Michael (Northampton S)
Steen, Anthony (Wavertree)


Hunt, John
Morrison, Charles (Devizes)
Stewart, Donald (Western Isles)


Hurd, Douglas
Morrison, Peter (Chester)
Stewart, Ian (Hitchin)


Hutchison, Michael Clark
Neave, Airey
Stokes, John


Irving, Charles (Cheltenham)
Nelson, Anthony
Stradling Thomas, J.


James, David
Neubert, Michael
Taylor, R. (Croydon NW)


Jenkin, Rt Hon P. (Wanst'd &amp; W'df'd)
Newton, Tony
Taylor, Teddy (Cathcart)


Johnson Smith, G. (E Grinstead)
Normanton, Tom
Tebbit, Norman


Joseph, Rt Hon Sir Keith
Nott, John
Thatcher, Rt Hon Margaret


Kaberry, Sir Donald
Onslow, Cranley
Thomas, Rt Hon P. (Hendon S)


Kellett-Bowman, Mrs Elaine
Oppenheim, Mrs Sally
Thompson, George


Kershaw, Anthony
Osborn, John
Townsend, Cyril D.


Kilfedder, James
Page, John (Harrow West)
van Straubenzee, W. R.


Kimball, Marcus
Page, Rt Hon R. Graham (Crosby)
Vaughan, Dr Gerard


King, Evelyn (South Dorset)
Pardoe, John
Viggers, Peter


King, Tom (Bridgwater)
Parkinson, Cecil
Wainwright, Richard (Colne V)


Kitson, Sir Timothy
Pattie, Geoffrey
Wakeham, John


Knight, Mrs Jill
Penhaligon, David
Walder, David (Clitheroe)


Knox, David
Peyton, Rt Hon John
Walker, Rt Hon P. (Worcester)


Lamont, Norman
Pink, R. Bonner
Walker-Smith, Rt Hon Sir Derek


Lane, David
Price, David (Eastleigh)
Walters, Dennis


Lamont Michael (Melton)
Prior, Rt Hon James
Warren, Kenneth


Latham, Michael (Mellon)
Pym, Rt Hon Francis
Watt, Hamish


Lawrence, Ivan
Raison, Timothy
Weatherill, Bernard


Lawson, Nigel
Rees, Peter (Dover &amp; Deal)
Wells, John


Le Marchant, Spencer
Rees-Davies, W. R.
Welsh, Andrew


Lester, Jim (Beeston)
Renton, Rt Hon Sir D. (Hunts)
Whitelaw, Rt Hon William


Lewis, Kenneth (Rutland)
Renton, Tim (Mid-Sussax)
Wiggin, Jerry


Lloyd, Ian
Rhys Williams, Sir Brandon
Wilson, Gordon (Dundee E)


Loveridge, John
Ridley, Hon Nicholas
Winterton, Nicholas


Luce, Richard
Ridsdale, Julian
Young, Sir G. (Ealing, Acton)


MacCormick, Iain
Rifkind, Malcolm
Younger, Hon George


McCrindle, Robert
Roberts, Michael (Cardiff NW)



Macfarlane, Neil
Roberts, Wyn (Conway)
TELLERS FOR THE NOES:


MacGregor, John
Rodgers, Sir John (Sevenoaks)
Mr. Fred Silvester and


Macmillan, Rt Hon M. (Farnham)
Rossi Hugh (Hornsey)
Mr. W. Benyon.


McNair-Wilson, M. (Newbury)
Rost, Peter (SE Derbyshire)

Question accordingly agreed to.

Clause 14 ordered to stand part of the Bill.

To report Progress and ask leave to sit again.—[Mr. Joel Barnett.]

Committee report Progress: to sit again Tomorrow.

ADJOURNMENT

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Coleman.]

Orders of the Day — PETROL (PRICE)

11.10 p.m.

Mr. David Steel: I am glad to have the opportunity to raise the question of the

cost of petrol as it affects rural communities. This has been a matter of concern for many years and I do not pretend that it is a new issue, but it has become a greater issue in recent weeks with the successive increases in petrol prices.
One of the difficulties of in dealing with the subject is that no one Department is responsible, and I am grateful to the hon. Gentleman and Financial Secretary for undertaking to reply in so far as he is able to do so and in so far as the Treasury is responsible for some aspects of policy. But the Department of the Environment, the Scottish Office, the Welsh Office and the Department of Energy—all are involved. I regard that situation as one of the great difficulties


—namely, that a series of independent departmental policies have been pursued over the years by successive Governments which have had the effect of causing real hardship in rural communities. I appeal to the Government to give some recognition to that fact and to pay some attention to the situation so that it may be put right for the future.
Ever since the policy was pursued of giving grants to railway lines running at a loss, there has never been any policy of transferring savings from the closure of railway lines to support other forms of transport in areas affected. I am the only Member of this House who represents three counties, but in the days before I was a Member of Parliament the three counties had a network of railway lines. Today there is not a single railway line or railway station in the three counties.
When the last major rail closure took place, the Government of the day said that it would save £750,000 a year. If only one-tenth of that sum had been allocated for alternative transport, the position today would have been easier than it is. Therefore, if the Government are to continue their policy of rail closures, to save money, I appeal to them to ensure that some of the money so saved should be allocated to support transport in other ways. Instead the only form of support we have directly from the Treasury is support through the rate support grant to local authorities to subsidise bus services.
Already in England and Wales—and, I suspect, shortly in Scotland—a circular has been issued pointing out that this element of rate support grant will have to be cut by 50 per cent. by 1979. At a time of inflation, a cut of that magnitude means that we can look forward in a few years ahead to severe cutbacks in capacity of local authorities to subsidise the continued operation of bus services in these same areas. Therefore, it is relevant to ask: what alternative policy can the Government pursue?
The Conservative Government toyed with the idea of introducing new regulations governing the use of mini-buses and enabling them to be more widely used. Unfortunately, this never saw the light of day. I have given notice of this

question. Is it any part of the Government's intention to pursue this idea to see whether there is any possibility of enabling the vehicle, commonly known as the mini-bus, to be more widely used, with fewer regulations and less control than those that apply to the large bus?
I put this question because of an example in my constituency to which I shall specifically refer, which took place during the recent bus strike in Scotland. In my area—and, I suspect in the constituencies of many hon. Members who are attending the debate—people travel quite long distances to work. I am referring not to round trips of 20 to 30 miles, which are commonplace, but to trips of 60 to 70 miles a day.
In one village in my constituency—a village that is only about 12 miles from the nearest town—during the bus strike a group of 15 workers got together to hire a mini-bus at a cost, per head, of £1·50 per week. They operated that mini-bus quite successfully. One person collected the fares and paid for the hiring of the vehicle for the period of the strike. When the strike was over they found that this operation, which had cost the individual worker £1·50 per week, was replaced by the service bus at £2·50 a head per week. The bus company complains that this service is losing money. However, the traffic commissioners prevent the continuation of this initiative which is to the benefit of the local community.

Mr. George Younger: I agree with the hon. Gentleman in what he is saying, but he is not quite right about the rate support grant position. Half the cost of the support given to a rural bus service is a direct grant covered in full. The other half is eligible for rate support grant. Therefore, there is a little more assistance than he made out.

Mr. Steel: That is correct. I was not going into the detail. I am aware of the 50–50 split on the finance.
I move to discuss the rôle of the traffic commissioners because I am puzzled about it. In circumstances like these they have not only prevented the services taking place, but in other cases—for example, the Post Office has introduced in my area and in many parts of Scotland, I think


even faster than in England or Wales, excellent mini-bus postal deliveries combined with the carrying of passengers—insisted that they charge fares comparable with the old, out-of-date bus services. The Post Office hase often been required to charge higher fares in rural areas than it would recommend in its own commercial judgment. That cannot be right. I should like some explanation from the Government why that should be so.
Having referred to the possible use of mini-buses and the loss of public transport from rural communities—I live in a village which used to have a twice-weekly bus service, but now has none, so I have a personal interest—I come back to the point that in many rural areas the private car is now, of necessity, the only form of public transport. Therefore, when the Government, in pursuit of their energy policy, decide—properly, in my view—to increase the tax on petrol directly to discourage the use of the private car, they do so in a wholly indiscriminate way, and the result is a severe increase in the basic cost of living of people who have no alternative form of transport.
It is not a question of persuading people to use the Underground, the bus service or the commuter train, because they are not available. Moreover, these areas coincide with areas of relatively low wage earning. The cost of travel to work for the parish minister, the village schoolteacher, the farm worker and others forms a high percentage of their weekly income. This is clear from the correspondence which I, and no doubt other hon. Members, have been receiving from constituents since the VAT increases on petrol imposed by the Government in pursuit of their energy policies.
I suggest that this is where the direct responsibility of the Treasury comes in. It is up to the Treasury to consider ways of giving direct relief to areas most severely affected by these recent changes.
I should like to suggest three possible remedies for the Government's consideration. I am not pretending that any one of them is perfect, but I think that in different ways they would help.
First, in areas such as this, and possibly in the country as a whole—I know that this has been considered by the Inland Revenue on many occasions—there may be a case for allowing the cost of

travelling to work as a necessary expense against income tax. Such a scheme would be administratively relatively simple to operate.
Secondly, the very fact that there is local authority registration of both private and commercial vehicles means that it would be administratively possible to introduce a system, even with the computerised centre, of a regionally-varied vehicle excise duty. I know that such a scheme could be evaded, and there might be loopholes, but the idea is worth considering. If the Government are serious about stopping the use of the private car in London, instead of talking about imposing a £1 per day parking charge they should consider a steep increase—possibly fourfold—in the £25 excise duty, while making a reduction in the rate in parts of the country where the private motor car cannot be regarded as a luxury.
Thirdly, some countries operate a two-tier price system for petrol. There is no reason why—given that the Government have prepared a system for universal petrol rationing—certain areas could not be designated as lacking in sufficient public transport to merit the issue of coupons which would entitle the recipient to purchase petrol minus a substantial element of the tax up to a certain quantity per motor vehicle. This would be more cumbersome administratively, but it would be fair and be seen as a method of helping the areas of the country most affected.
I recognise that this is not a matter for one Government Department, and I am glad to see Ministers from three Departments here tonight, but this is a feature of our economy that has been ignored for many years. The problem has become acute because of recent Government policy, and I hope that the Financial Secretary will be able to give us some assurance that the Government are taking seriously the effect on rural communities.

11.22 p.m.

Mr. Geraint Howells: It gives me great pleasure to support what was said by my colleague and friend the hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel) in raising the important issue of high petrol costs in rural areas. I endorse everything that


he has said, and I shall not cover the same ground, because he has outlined the hardship experienced by families in rural areas of Scotland.
It is also true to say that high petrol prices will have a disastrous effect on the cost of living in the rural and urban areas in Wales. Many settlements and villages—I am sure the Minister is aware of this—have no public transport. Certainly, many villages in my constituency have no public transport of any kind.
Local authorities are doing their utmost to try to solve the transport problem, but I believe—and I have tabled a Question to the Minister for reply tomorrow—that there should be a comprehensive policy to help the local authorities and families living in the rural areas.
I am convinced that if the Government do not introduce a comprehensive policy on rural transport and on the price of petrol, depopulation will accelerate and families will move from the countryside to the towns—a trend that we must avoid at all costs. We have been fortunate in Wales over the past few years, in that people have tended to move from the towns to the countryside and have helped to strengthen communities and hamlets. Unless there is a comprehensive policy—and the matter is urgent—the village structure will become unbalanced.
I feel sorry for the elderly. If they go to the local post office for a stamp—the price of which will be increasing from 5p to 7½p—or to the store for their bread or sugar, they will have to pay a few more pence in petrol for the car. I feel sorry for those between 14 and 17, who are full of life. In an area like Cardiganshire, where there is no rural transport, they become isolated and over a period move away from the villages we are so proud of.
I am also sorry for the workers. The average earnings in rural areas, including many parts of Wales, are much lower than the national average. Help is needed to retain a strong labour force in rural areas. I urge the Minister to give this help before it is too late.

11.27 p.m.

Mr. Hector Monro: As the Member for the neighbouring constituency, I support what the hon. Member

for Roxburgh, Selkirk and Peebles (Mr. Steel) has said, particularly about the penal petrol situation. He was right to emphasise the difficulties about buses and the traffic commissioners, but what concerns the countryside most is the steep rise in petrol prices, which is handicapping employment and devastating social life.
Cars are essential; there is no alternative to them. I hope that the Government will consider some way of alleviating the impact of the price of petrol in rural areas, in England and Wales as well as Scotland. The large attendance at this debate has shown the strength of the complaints in rural areas at present.

11.28 p.m.

The Financial Secretary to the Treasury (Dr. John Gilbert): I congratulate the hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel) on having secured this debate, on the eloquence with which he stated his case, and on the almost unprecedented attendance for an Adjournment debate of hon. Members wishing to contribute as well as listen. I was grateful that he recognised that the Government are conscious of the problems. This is evidenced by the presence tonight of two of my colleagues, from the Department of the Environment and the Scottish Office.
If these problems were easy to solve we should not be discussing them tonight. I am probably the least competent of the three Ministers present tonight to discuss many of these matters, but I shall do my best.
The subject of mini-buses is probably the one on which I can give the hon. Gentleman least information, but the Under-Secretary of State for the Environment has initiated a thoroughgoing review of rural transport. Discussions are already going on with local authorities. This is not a short-term study and we do not expect immediate results. I accept that the recent increase in petrol prices exacerbated the matter, but we are talking about seminal trends, which have grown up over several years.
I am glad I carry the hon. Gentleman with me in terms of the complexity of the matter. No solution for the rural transport problem is excluded from the


remit of the committee. I hope that it will not be too long before some of its work sees the light of day.
We accept that in many cases the increase in petrol price does not mean that people use their disposable income in a different direction because there is just no other way for them to travel. We accept that it simply means a reduction in their net disposable income. But where there are no bus services there are, for example, developments like the use of car pools, whereby people can integrate their social and economic life and share their transport with neighbours.
I agree that that is not an adequate solution in the long run, although the growing use of car pools is to be encouraged in urban as well as rural areas. I have just returned from the United States, where I saw for the first time on freeways into Los Angeles a special lane reserved for buses and car pools. If one is carrying more than three people in one's car, one can use a special fast lane. We might consider such a system in this country. I am not taking that suggestion from my hon. Friend's departmental brief, and I am not, of course, committing him in any way. Our freeways are not as wide as those in some parts of North America, and we might find ourselves in difficulty, but I cite this example to show that there is a whole range of possible solutions which my hon. Friend might be prepared to consider.
The hon. Gentleman referred to bus service subsidies and was supported by the hon. Member for Cardigan (Mr. Howells). In 1974–75, the amount of support to buses will be about four times as great as in the previous year, and that is a step in the right direction. I understand that this very high level of subsidy has been accepted in England and Wales but has not yet been settled in Scotland, although a settlement may be expected there shortly.
At the same time, the Government have been discussing with local authorities areas in which rapid growth in their rate fund expenditure could be pruned and held in check. Transport subsidies have been covered in this guidance. The Government's aim—this is a platitude but nevertheless a statement of fact—is that bus operations in general over the next four years should become more viable.
One of the consequences of the increase in petrol prices—not one envisaged or desired—is that bus services are likely to become more commercially viable because a greater pool of customers is prepared to make use of them if they are provided—which is a very big "if" in questions of this kind. However, it does make the viability of bus services a more likely prospect, so there is in that factor certain cold comfort.
The hon. Gentleman asked me about savings from railway lines, and whether such savings could be transferred towards transport in rural areas. Few savings can now be made in this direction, because so many lines have already been closed in the rural areas. I cannot, therefore, hold out any hope that much progress can be expected in that direction.
The hon. Gentleman also asked questions on which I am on rather firmer ground, as a Treasury Minister, although I am still not, perhaps, in a position to give more welcome answers. First, he asked about the possibility of having travel-to-work expenses deductible for income tax purposes. This suggestion is often advanced, but it presents many difficulties.
There is such an element of personal choice, in so many cases, as to where a person lives and where he works. I know that in many cases a man has no option but to travel to work, but for the main body of taxpayers there is a considerable element of choice as to where they work and, far more important, where they live. It would be exceedingly difficult to produce an equitable arrangement for deducting travel expenses to work for everyone. For example, some people with heavy travelling expenses are enabled, as a result of those heavy expenses, to live in an area of low housing costs, while others not so benefiting would say that such a person was getting an advantage which they did not have because, by incurring higher housing costs, they did not have the same level of travelling costs. There would be an element of inequity there.
Furthermore, not all those who live in the countryside suffer from the low incomes so graphically described by the hon. Gentleman and his hon. Friend the Member for Cardigan. For instance, there are those who live in Sussex—in the stockbroker belt—who deliberately incur


high travelling costs because they want the pleasure of living in a nice part of the country. I do not imagine that it would be part of the hon. Gentleman's case that they should have assistance in the way he suggests, having their expenses subsidised at quite high marginal rates of income.

Mr. Monro: But the stockbroker belt has a commuter railway service, and—

Dr. Gilbert: I would rather not give way. I am trying to answer the points raised by the hon. Member for Roxburgh, Selkirk and Peebles, whose Adjournment debate this is. I note what the hon. Gentleman says, but season tickets to the constituencies represented by some of his hon. Friends at first-class rates are quite expensive, and it would be very difficult to identify for that purpose taxpayers travelling from a rural area to an urban area, and so on. Moreover, many of my constituents living in an urban area have high travelling expenses from one part of the conurbation to another. The problem of heavy travelling expenses is not confined to the rural areas. There is also the problem of defining a rural area. This is not nearly so simple as might appear in an exchange across the Floor.
The hon. Gentleman asked me also about the possibility of a two-tier pricing system for petrol. As he knows, just before Christmas, the Prime Minister indicated that we are thinking about the possibility of introducing a system of that sort. I cannot usefully say more at this stage. The hon. Gentleman knows what the Prime Minister said. Studies are going forward, and I hope that some news will come from them before long. I cannot give a date, but the matter is being seriously studied at a high level.
Next, the hon. Gentleman asked about the possibility of a regionally-varied vehicle excise duty. There are considerable

technical difficulties here. A vehicle licence is issued with respect to the type of vehicle and not with respect to the driver of it. The person in whose name a vehicle is registered is not necessarily the owner, which fact presents a further difficulty. Under the existing law, therefore, if people living in certain areas could, according to the hon. Gentleman's proposal, be permitted to register cars on payment of a lower rate of vehicle excise duty, it could open the way to evasion on a large scale by people not actually living there and not using their vehicles in that area. It would be a difficult matter to police. Even if there were different coloured licence discs, one could never say where, exactly, the home of the car was, or whether the person who should be entitled to the preferential rate of duty was the person in fact benefiting from it. I do not think, therefore, that schemes of that sort offer a way forward, and I feel that I should mislead the hon. Gentleman if I suggested that I saw a great deal of practical value in them.
I think that I have touched on all the points which the hon. Member raised, though I recognise that I shall not have succeeded in satisfying him. I am grateful to him for giving me notice of the questions which he wished to put. I am sure that the House will return to this matter on many occasions in the future. The importance of it is obvious from the fact that after a tiring day there are so many of us here tonight. I have no doubt that the hon. Gentleman's constituents will be grateful to him for the force with which he has put their problems to the Government, and I assure him that the Government are fully seized of them. We certainly intend to do what we can as soon as possible.

Question put and agreed to.

Adjourned accordingly at twenty minutes to Twelve o'clock

Orders of the Day — Second Reading Committee

Wednesday 15th January 1975

The Committee consisted of the following Members:


Mrs. Lena Jeger (Chairman)


Anderson, Mr. Donald (Swansea, East)
McCartney, Mr. Hugh (Dunbartonshire, Central)


Crowder, Mr. F. P. (Ruislip-Northwood)



Davidson, Mr. Arthur (Parliamentary Secretary, Law Officers' Department)
MacCormick, Mr. Iain (Argyll)



McMillan, Mr. Tom (Glasgow, Central)


Grieve, Mr. Percy (Solihull)
Mayhew, Mr. Patrick (Royal Tunbridge Wells)


Hunt, Mr. John (Ravensbourne)



Lewis, Mr. Kenneth (Rutland and Stamford)
Noble, Mr. Mike (Rossendale)



Orbach, Mr. Maurice (Stockport, South)


Litterick, Mr. Tom (Birmingham, Selly Oak)
Park, Mr. George (Coventry, North-East)



Pendry, Mr. Tom (Stalybridge and Hyde)



Rees-Davies, Mr. W. R. (Thanet, West)


Luard, Mr. Evan (Oxford)
Stanbrook, Mr. Ivor (Orpington)


Lyons, Mr. Edward (Bradford, West)
Stradling Thomas, Mr. John (Monmouth)

Orders of the Day — ARBITRATION BILL [Lords]

10.30 a.m.

The Parliamentary Secretary to the Law Officers' Department (Mr. Arthur Davidson): I beg to move,
That the Chairman do now report to the House that the Committee recommend that the Arbitration Bill [Lords] ought to be read a Second time.
The purpose of this short Bill is, I think, self-explanatory. It is to enable the United Kingdom to accede to the 1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards. However, in order to bring out the significance of accession, I should perhaps tell hon. Members a little about the background to the convention.
As hon. Members will know, businessmen and traders have long looked to arbitration to solve their disputes in preference,

in many cases, to litigation. It is usually quicker, cheaper, less formal and more private. Due no doubt to the United Kingdom's position as one of the world's leading trading nations, London has grown to be a major centre for arbitration settlements of disputes arising in international trade and commerce.
I am sure the Committee will agree that we are lucky to have in the United Kingdom a highly experienced body of professional arbitrators who cover a wide range of activities, such as general trade and commerce, engineering, insurance and surveying. They not only meet a requirement of our own traders and businessmen, but also, because of the high reputation they have built up, their services are sought by buyers and sellers in


other countries. Not many countries enjoy facilities comparable to those available here and, consequently, people engaged in trade between two foreign countries frequently look to London arbitrators for the settlement of their disputes. Hon. Members will, therefore, appreciate that our arbitration arrangements are important to the United Kingdom, both for the protection of its own traders and, in these times, as a valuable source of income and foreign exchange.
Clearly, however, the awards of arbitrators in disputes involving parties in different countries would not be of much value if they were not recognised and, if necessary, enforced by the courts of law in the countries concerned. The United Kingdom, therefore, because of its double interest in having successful international arbitration arrangements, has played a major part in promoting international agreements which provide common rules for arbitration and make the settlement of disputes by arbitration more effective.
The United Kingdom is already a party to two main international agreements which bear on arbitration—the Protocol on Arbitration Clauses of 1923, which is known as the Geneva Protocol, and the Convention on the Execution of Foreign Arbitral Awards of 1927, which is known as the Geneva Convention. These instruments have worked reasonably well, but over the years certain shortcomings have become apparent. With a view to remedying these defects, an international conference, under the auspices of the United Nations, was held in 1958. That gave rise to a new Convention on Arbitral Awards, generally known as the New York Convention. The Bill will enable the United Kingdom to accede to this convention.
This legislation is, I concede, almost embarrassingly overdue. Perhaps therefore I ought to mention to the Committee some of the reasons for the delay.
Initially the Government of the day had certain reservations about the convention and referred for advice to the Lord Chancellor's Private International Law Committee. That Committee considered the provisions of the convention thoroughly and reported on it in 1961. The Committee concluded the convention

was an improvement on the 1927 Geneva Convention for the following main reasons. It covered a wider range of agreements and awards; it clarified the burden of proof between the parties to disputes, and made obstruction of an award more difficult.
The Committee accordingly recommended that the convention was acceptable to the Government, with one reservation. This concerned domestic arbitration agreements, where both parties and the arbitrator reside or are based in the United Kingdom. The Committee thought that the convention as it stood might be interpreted as covering domestic agreements and thus removing from English and Northern Irish courts their present discretionary powers to try such disputes. This discretion is valued by the courts and the Committee thought that it should be maintained and that it would be consistent with the intention of the convention to exclude purely domestic agreements. The Government agree, and this exclusion has been reflected in the Bill.
Following the Lord Chancellor's Private International Law Committee report, legal and commercial organisations were consulted to ascertain their views on the desirability of accession. This process naturally took a considerable time, especially on the complicated domestic point I have just mentioned, but eventually this was cleared and there was general support for accession.
It has, however, taken a long time to translate this general support into legislative action. A Private Member's Bill was introduced in November 1973, but it was lost when Parliament was dissolved last February, and, although it was introduced by the Government in another place last July, it was again lost on the Dissolution last September. The Bill has thus suffered a frustrated history and has been an innocent victim of parliamentary changes.
In the time that has elapsed since the convention was signed, many countries have ratified or acceded and the United Kingdom is now almost the only major trading nation which is not a party to the convention. In this situation, the United Kingdom is at a disadvantage both because the recognition and enforcement of arbitration awards may be hampered to the detriment of our trading interests,


and because our arbitrators are excluded from any contract where the parties have specified that the arbitration must be in a New York Convention country. The Bill, if passed, will therefore enable us to rectify this unfortunate situation.
It may be helpful to hon. Members if I briefly explain the purpose of the various clauses of the Bill. Clause 1 describes the conditions under which United Kingdom courts are required, under the convention, to stay legal proceedings where there is an agreement between the parties that the dispute should be submitted to arbitration. This clause excludes domestic agreements, to which I referred earlier. Clause 2 provides that awards made in countries which are parties to both the 1927 Geneva Convention and the New York Convention shall be treated as New York awards.
Clause 3 enables awards made in other countries which are parties to New York to be enforced in the United Kingdom in the same way as awards made here. Clause 4 sets out the evidence which persons seeking to enforce convention awards must provide. Clause 5 allows the courts to refuse to enforce a convention award if it can be proved to be defective in certain respects. Clause 6 is a saving clause which retains the freedom to enforce awards by other methods than under this legislation. Clause 7 provides for interpretation and Clause 8 for repeals, commencement, and the like.
The convention allows participating countries to apply enforcement reciprocally, that is, only to awards made in countries which are parties to the convention. Most countries which have acceded to the convention have now taken advantage of this reservation, and we propose to do the same.
In conclusion, successive Governments of both parties have accepted that we should accede to this convention. The Committee will be pleased to note that the Bill has already completed its passage through another place. I therefore commend it to the Committee.

10.40 a.m.

Mr. Patrick Mayhew: The Bill should be tested by examining the extent to which it advances this country's interests. We believe it passes that test. I cite a sentence from the Fifth Report of the Lord Chancellor's

PIL Committee, to which the Minister referred. It was appointed to study the New York Convention of 1958, to which we are now proposing to accede. The Committee said:
Arbitration is a valuable lubricant in international trade as businessmen are entitled to such help as Governments can give them in making it effective.
It is in order to make arbitration more effective that the Bill seeks to enable the United Kingdom to accede to the convention.
The terms of the convention received the approval of the PIL Committee in 1961—and the Minister has acknowledged that a considerable amount of water has flowed beneath the bridges since then—subject to the qualification about domestic arbitration agreements as distinct from the recognition and enforcement of foreign arbitration awards. The committee thought that English courts ought to be obliged to recognise, in the technical sense, only those arbitral agreements that were foreign and not domestic agreements. That distinction is adopted in Clause 1(2), but it is subject to a definition of what is a domestic agreement, which it will be necessary to consider in detail in Committee, but not today.
As distinct from a foreign arbitral agreement, it is right that a United Kingdom court should not lose its present discretion in the case of a domestic arbitral agreement as to whether to stay litigation of any issue covered by that agreement. At present, that discretion is enshrined in Section 4(1) of the Arbitration Act 1950. A court will be familiar with the law governing an arbitral agreement made within its own jurisdiction whereas that will not be so in the case of a foreign arbitral agreement. It is therefore in the interests of the parties to the agreement that they should have their agreement recognised as of right and without argument in those circumstances.
I think that the PIL Committee was right. It is not surprising that it was, because it included Lord Justice Cross of Chelsea, Lord Justice Megaw and Lord Wilberforce—a very high-powered committee. Of course there were others, but those were the judicial members. The reason I think that they were right is that, as the Minister says, it is not much use businessmen concluding an agreement that any dispute between them shall go to


arbitration rather than be determined by the courts if they cannot be reasonably sure that the arbitrators' award will be worth the paper it is written on, and a great deal more besides.
It is regrettably true, I have to acknowledge with some ruefulness, that businessmen often prefer to go to arbitration rather than to take their matters before the courts, more in protest at litigation. The courts of different countries have been very jealous of their basic right to scrutinise arbitration agreements and, indeed, the dispute which has been the subject of the arbitration award before ordering that the award shall be enforced by the sanctions that the courts alone can command.
The 1927 Geneva Convention, of which we have been reminded this morning by the Minister and which the 1958 New York Convention is designed to supplant and whose obligations are implemented in Part II of the Arbitration Act 1950, provided in these terms—it is an important distinction, because this is one of the ways in which the 1958 Convention is an improvement:
an award is not enforceable if it is contrary to the public policy or the principles of the law of the country in which it is sought.
The important words are:
or the principles of the law of the country in which it is sought.
The PIL Committee received complaints from businessmen in this country that in some countries the courts used this as a justification for virtually retrying a dispute that had been the subject of an arbitration award in order to see whether the award was consistent with the principles of their own law. That can hardly have been the intention of the businessmen who sought to take a short cut by making an arbitration agreement.
The International Chamber of Commerce considered that this article of the 1927 convention was one of the main defects of the convention as a whole. Article 5 of the 1958 convention deletes this reference to the principles of the law of the courts dealing with the matter, and leaves only public policy out of these two grounds for rejection. We believe that this is a good thing, and so, I think, does the commercial community.
We also welcome the further improvement in the "lubrication" that international

arbitration agreements can effect under the 1958 convention. The burden of proof has been touched upon by the Minister this morning. This burden of proof in regard to an award is an important example of this improvement. But under the Geneva Convention, in order to get an award enforced one had to prove that it had become "final" in the country in which it had been made, and that no proceedings to challenge it were pending.
But "final" means different things in different places. In England, finality is achieved if no challenge to the award is made within six weeks of its being made, but in some countries it is final so soon as it is delivered; in others still there is no time limit for challenging proceedings. Therefore, double judicial scrutiny is necessary under the 1927 convention and there is immense scope for people who wish to contest an award to show that it has not yet become binding on them if they are not happy with its content.
The 1958 convention makes a great improvement. It both reverses and clarifies the burden of proof. It provides that it is for the party contesting the award—contesting, not seeking to enforce it—to show that it has not yet become "binding" on the parties, and an award is "binding" if no further recourse may be had to any other arbitral tribunal, for example, an appeals tribunal. This is much more satisfactory for the commercial community. It significantly and usefully cuts down the scope for obstructing an award if it has gone against one.
Lastly, we welcome the fact that the 1958 convention does not impose upon the courts an obligation to enforce an arbitral award elsewhere which may be fraudulent or oppressive. Courts retain this valuable right to satisfy themselves in that regard. The safeguards built into the 1927 convention are retained, legal control over the enforcement of arbitral awards is retained, and, to the extent that an award offends against natural justice, it will not be enforced any more than if it is against the public policy of the country of enforcement. This seems just and appropriate.
I do not know whether the Minister can help us as to why, in Clause 1(4), the definition of the domestic arbitral agreement does not require the agreement to


be subject to the law of England, Scotland or Northern Ireland, as well as the requirements set out in the subsection. This was suggested as a possible solution and a possible definition by the PIL Committee. It is just a point of detail and can be looked at in Committee.
No one of whatever party can say that British Governments have exactly rushed this fence. They have arrived at it long after most of our principal trading partners have successfully taken it. By acceding to the 1958 convention we shall, I believe, greatly assist our commercial community and our arbitration profession without diminishing the necessary ultimate control of the courts over their operations, and for those reasons we warmly support the Bill.

10.48 a.m.

Mr. Ivor Stanbrook: I, too, welcome the Bill. I agree that it has taken a long time for Parliament to make the convention effective in this country. On the other hand, the principle of reciprocal enforcement of judgments is something which this country has always accepted very gradually. We always wanted assurance that we could properly accept these matters affecting our own jurisdictions. Therefore, perhaps our national diffidence caused the great delay, quite apart from the investigations which were necessary before legal steps could be taken in the form of a Bill.
I, too, am rather impressed by the definition of a domestic arbitration agreement. It seems by its terms to exclude any agreement which has any sort of foreign element. "Foreign element" in this context seems to include the fact that the agreement might have been concluded, say, in a United Kingdom colony—for example, Hong Kong—or some other part of the world where possibly all British law, as we understand it, and where the parties might themselves be subject to the jurisdiction of British courts, would be thought to be a domestic agreement but where in this case it is not in the United Kingdom as such and it becomes subject to the operation of the convention.
My other questions concern a matter which has already been raised by my hon. and learned Friend the Member for Royal Tunbridge Wells (Mr. Mayhew)—

the matter of enforcement. There is a reference to a case of an award not yet having become binding on the parties. I suppose that that will have been provided for in the arbitration agreement. But there must be many cases where the award is subject to appeal and where the domestic jurisdiction relating to the arbitration agreement concerned does not provide for the suspension of the award pending the appeal. This may be covered by the wording, but it appears to me that it may give rise to possible confusion in future if a matter which has been contested under other jurisdiction is subject to appeal but is the subject of an application for enforcement in Britain.
We do not also seem to accept in terms the proposition that enforcement elsewhere might be contrary to the terms of the arbitration agreement. No doubt many arbitration agreements specifically exclude enforcement elsewhere than in the country in which it is concluded. It may well be that these cases can occur if, for example, in a foreign country it is not desired that enforcement should be elsewhere than in the country concerned, for reasons perfectly acceptable to both parties to the agreement. In that event, one would have thought that the grounds for refusal of enforcement should have included where enforcement elsewhere would be contrary to the terms of the arbitration agreement.
I appreciate that these are minor points and, like my hon. and learned Friend, I welcome the Bill.

The Chairman: As this is a Second Reading Committee, does the hon. Gentleman wish to ask leave of the Committee to speak again?

10.54 a.m.

Mr. Arthur Davidson: I do, Mrs. Jeger.
I am grateful to the hon. and learned Member for Royal Tunbridge Wells (Mr. Mayhew) for his courtesy in letting me know in advance that he intended to raise the question about the difference between the definition of domestic arbitration agreements appearing in the Bill and that suggested by the PIL Committee. This is a Committee point and can be discussed in detail during the Committee stage.
The New York Convention requires the acceding countries to recognise all


arbitration agreements. The PIL Committee was concerned about the protection of the discretion of the courts. Therefore, any definition that it drew up had to be narrow in case it conflicted with the requirements of the convention. That is why the admittedly narrower definition was drawn up. Certainly I am prepared to re-examine the point and to discuss it in more detail in Committee.
The points raised by the hon. Member for Orpington (Mr. Stanbrook) were

THE FOLLOWING MEMBERS ATTENDED THE COMMITTEE:


Jeger, Mrs. Lena (Chairman)
McMillan, Mr. Tom


Davidson, Mr. Arthur
Mayhew, Mr.


Hunt, Mr.
Noble, Mr.


Lewis, Mr. Kenneth
Orbach, Mr.


Litterick, Mr.
Park, Mr.


Luard, Mr.
Stanbrook, Mr.


MacCormick, Mr.
Stradling Thomas, Mr. John

rather detailed and technical. It was right that he should raise them. I will consider them and write to him about them.

Question put and agreed to.

Resolved,
That the Chairman do now report to the House that the Committee recommend that the Arbitration Bill [Lords] ought to be read a Second time.

Committee rose at five minutes to Eleven o'clock.

Orders of the Day — Second Reading Committee

Wednesday 15th January 1975

The Committee consisted of the following Members:


Sir Alfred Broughton (Chairman)


Bennett, Dr. Reginald (Fareham)
Irving, Mr. Sydney (Dartord)


Brotherton, Mr. Michael (Louth)
Jones, Mr. Alec (The Under-Secretary of State for Health and Social Security)


Callaghan, Mr. Jim (Middleton and Prestwich)
Lomas, Mr. Kenneth (Huddersfield, West)


Cohen, Mr. Stanley (Leeds, South-East)
McCusker, Mr. (Armagh)


Coleman, Mr. Donald (Neath)
Moonman, Mr. Eric (Basildon)


Davies, Mr. Bryan (Enfield, North)
Onslow, Mr. Cranley (Woking)


Fisher, Sir Nigel (Surbiton)
Roderick, Mr. Caerwyn E. (Brecon and Radnor)


Gardiner, Mr. George (Reigate)



Hatton, Mr. Frank (Manchester, Moss Side)
Stewart, Mr. Ian (Hitchin)



Stradling, Thomas, Mr. John (Monmouth)


Holland, Mr. Philip (Carlton)
Taylor, Mrs. Ann (Bolton, West)

Orders of the Day — BIOLOGICAL STANDARDS BILL [Lords]

10.30 a.m.

The Under-Secretary of State for Health and Social Security (Mr. Alec Jones): I beg to move,
That the Chairman do now report to the House that the Committee recommend that the Biological Standards Bill [Lords] ought to be read a Second time.
The Bill has been brought from another place, where it received all-party approval, and I hope that it will receive the same all-party approval from the Committee and the House. It is a United Kingdom Bill, the purpose being to establish a National Biological Standards Board to manage, under the direction of the Ministers named in the Bill, the activities that are carried out at the National Institute for Biological Standards and Control. In practice, these Ministers

are my right hon. Friend the Secretary of State for Social Services and her colleagues who are responsible for health in other parts of the United Kingdom.
The institute is at present administered by the Medical Research Council, and the Bill reflects a decision to transfer the responsibility for administration from the MRC. The decision stems from the nature of the institute's present functions, and it may be helpful if I set these out in some detail.
The institute is concerned, firstly, with the preparation, characterisation, and issue of national and international standard reference materials for a number of important therapeutic, prophylactic and diagnostic biological substances widely used in medical treatment. Since it


is not immediately obvious what the expression "biological substances" implies, I should add that they include vaccines, serums, enzymes, hormones, antibiotics and blood products. The typical feature of these substances is that it is not possible to test their purity or potency by chemical or physical methods alone, and biological tests have therefore to be made. The purpose of the reference standards is to set a standard of potency and quality, by comparison with which manufacturers and the responsible authorities can test the products manufactured for release for medical use.
Secondly, the scientific staff of the institute test samples of batches of the products as a cross-check on the tests performed by the manufacturer, thus helping to ensure the quality of the product and hence related aspects of efficacy and safety. They also engage in research on problems arising out of these two main functions.
There has been a system of licensing of the manufacture for sale, and the importation, of a number of biological substances since 1927, under the Therapeutic Substances Act, 1925. At that time, the Medical Research Council agreed to undertake the scientific work relating to the setting of standards and devising of control tests for these substances, and to collaborate with the inspectors of the Health Departments, which, under the 1925 Act, were responsible—and still are—for the actual licensing of the manufacturers in securing the necessary safeguards at the manufacturing establishments.
Since those days, the enormous increase in the use of immunological agents, antibiotics and other biological substances has greatly enlarged the scope of the testing and advisory aspects of the work of the institute. Over the years, the institute has earned for itself a very high standing internationally, and the World Health Organisation has made it responsible for establishing, holding and distributing international reference standards for worldwide use for non-immunological biological substances. The international standards for immunologicals are entrusted to the State Serum Institute in Copenhagen, and those for veterinary biological substances to the Ministry of Agriculture, Fisheries

and Food Veterinary Laboratory at Weybridge.
The emphasis of the work of the institute has been shifted by these developments. The establishment of new standards and methods of control testing still involves research, but a very large part of the day-to-day work is now concerned with the production and maintenance of the standard reference material and control testing of the extensive range of biological substances for human use that are now on the market, and which, like all other medicinal products, are subject to licensing under the Medicines Act 1968, for the administration of which my right hon. Friends the Health Ministers are responsible. In view of the change of emphasis, it is considered no longer appropriate for the work of the institute to be administered by a research council.
The Government consider that the administration of the work of the institute should not be the direct responsibility of the Health Ministers but assigned to a separate board, which will be subject to direction by the Ministers. This relationship is on the same lines as in the case of the Public Health Laboratory Service Board and the Radiological Protection Board. On this basis, the transfer of responsibility to a separate board has the approval of the Medical Research Council and my right hon. Friend the Secretary of State for Education and Science. The arrangement also means that the staff will not be Civil Servants.
The provisions of the Bill are reasonably straightforward. Clause 1(1) deals with the establishment and name of the board. Clause 1(2) provides that the functions of the board shall be specified in an order by the Ministers, and that they shall relate to the establishment of standards for, the provision of standard preparations of, and the testing of biological substances.
The Medical Research Council has already been consulted about the content of the initial order that would set out the functions of the board in more detail. Any future changes in the board's functions will have to be specified in an amending order. In view of its long association with the work of the institute, there would be consultation with the Medical Research Council if any such


changes of the functions are required, and also with any other body, such as the Public Health Laboratory Service Board, that would be concerned with any proposed change.
Clause 1(3) requires the board to comply with any direction given to it by the Health Ministers. These directions cannot alter the functions of the board specified in the statutory order made under subsection (2).
Clause 2 enables the Ministers to appoint the chairman and members of the board. It is contemplated that there will be consultation with the Medical Research Council, the Medicines Commission and the Public Health Laboratory Service Board as to the membership. At the moment, it is thought that the board should be broadly like the joint advisory committee which, for a number of years, has acted as a sort of steering committee, advising the Medical Research Council and the Health Departments on the policy and priorities of the institute.
There would probably be a chairman and 10 to 12 members, of whom at least three would not be employees of the Health Departments, the Medical Research Council, or the Public Health Laboratory Service Board. These independent members would have wide and recent experience in connection with the standards for, and testing of biological substances or other experience relevant to the fact that the board would be accountable for its expenditure.
The Schedule to the Bill sets out further provisions concerning the board, and the terms of office of the members will be specified in the letters of appointment. Clause 2 also exempts the board from certain income tax and corporation tax requirements. This is normal practice in the case of public boards of this kind.
Clause 3 gives power to my right hon. Friend the Secretary of State for Social Services to make an order transferring from the Medical Research Council property, rights, liabilities and obligations to herself. The Council and the Department of Education and Science will be consulted before the order is made.
Clause 4 deals with financial matters, including the financing of the board out of moneys provided by Parliament and for the presentation of its accounts to

Parliament. The remaining clauses are mainly formal and self-explanatory.
Finally, I should like to repeat the two assurances of importance to the staff of the institute which were given in another place. First, if the Bill is passed, the staff at present working for the institute will be offered employment by the new board. It is intended that the terms and conditions of employment for each member of the staff will be not less favourable, taken as a whole, than his or her present terms as an employee of the Medical Research Council. The terms and conditions have not yet been settled, but, as soon as it is clear that the Bill will be passed, my right hon. Friend intends to take up informally with the staff organisations the best way of proceeding with the negotiations. In this way, it is hoped to make good progress before the board is formally established.
The second assurance concerns the right of scientific staff to undertake some personal research—a right which certain members of the present staff enjoy as employees of the Medical Research Council. The Health Departments are fully aware of the importance of this type of research, and, providing it does not interfere with the basic research or the development and maintenace of standards, it is intended that personal research may continue to be undertaken.

10.41 a.m.

Mr. Cranley Onslow: I share the Under-Secretary of State's welcome for this measure. As far as I can make out, he is about the seventh Minister of the Crown to stand up in one part or other of this building and commend the Bill to Parliament. They have not all been of the same party, and the Bill cannot, therefore, be regarded as particularly controversial. I understand the hon. Gentleman's half-expressed wish that we should take it "on the nod" this morning, but there are questions which we could usefully spend a few moments discussing.
But first I make a personal plea to anyone who happens to be holding a watching brief on behalf of the Leader of the House. I mean no disrespect to the Under-Secretary of State. He is not the first Minister to whom I have said this. He has this morning read substantially the same speech that was made by his


noble colleague in another place. I object to being treated as though I were illiterate and did no homework. I believe that 10 minutes of parliamentary time, which has a price that could be put on it, would have been saved if we had had from someone—the Minister perhaps—a letter, before we met this morning, saying "You might find it helpful to read the speech made in the House of Lords which I shall otherwise substantially have to repeat in Committee. If you have any questions, it will undoubtedly help you to have a little time for study in advance. Where there are changes in my speech from that made in the House of Lords, it will help you to know them".
Broadly speaking, if parliamentary time is precious, I should like to make my contribution towards saving it. I first said that to one of the Minister's colleagues about seven years ago, but my words have had no impact whatsoever. Perhaps constant repetition will get through to someone. But we could save time, All these explanatory and financial memoranda and Second Reading speeches are great parliamentary time wasters, and the House should have cottoned on to the fact by now.
There is one advantage, of course, in having the Lords Hansard to one's elbow because, through its use, it is possible to detect a change—and there is a change which I will come to at once. When the hon. Gentleman was talking about Clause 2 and the membership of the proposed board, he said that the Government envisaged having about 10 to 12 members in addition to the chairman, and that at least three of them were to be so-called independent members. His noble colleague in the House of Lords said there would be about 10 members, in addition to the chairman, and that at least two members would be independents.
I should be interested to know why this change has been made. As far as I am aware, it does not follow any pressure in the other place. There may be strong arguments for making the change, and I am disposed to sympathise with the introduction of more independent members, but, at the same time, if the ratio is to be significant, I would rather see 10 members and three independents than 12 members and three

independents. Perhaps a little research can be done on the hon. Gentleman's behalf so that the change can be explained to the House rather than passed over without explanation.
The second general point I should like to make is that it would be helpful to those of us who are not instantly familiar with every branch of the work of the Medical Research Council—amongst whom I have to number myself, though not, of course, my hon. Friends—if we could be told, roughly speaking, how many staff are involved in the work we are considering, how much money is spent from public funds, and what the income is from other sources. In other words, we should have something like a balance sheet to put the matter into perspective in a way which neither the explanatory memorandum nor either of the Second Reading speeches has done. If the Minister has them handy, perhaps he will give the facts to the Committee when he replies.
Two points of substance arise. In the explanatory memorandum, we are told that additional expenditure of £45,000 will result from the need to employ for the board certain staff who will not be taken over from the Medical Research Council—possibly 10 or 12 staff, which is not a significant number and not one to which the Committee will necessarily take strong objection. The point to which I am leading is: what will the Medical Research Council do with the £45,000 which it has thereby saved? Or will it go on employing these people by putting them on to other work? In which case, what other work?
Some of us have seen, with some alarm, reports that the work of the MRC is being curtailed and that the projects which it has been supporting are being reduced in number due to shortage of funds. Whether the Minister's brief this morning is to answer that particular point, I do not know, but it is a matter of some concern if work, say, with regard to cancer which the MRC has been doing, will have to be cut back because of shortage of money. This may be a small opening through which to extend the debate and if the Minister can respond to my invitation to wriggle through it, it would be interesting if he could say something about it.
The second point of substance concerns the staff. We are told that they will not be civil servants—a fact in which they may or may not rejoice. We are also told that the board shall do what the Ministers tell it. The Bill states:
The Board shall consist of members appointed by the Ministers …
and that
The Board shall in the performance of its functions comply with any directions given to it by the Ministers.
If the people who work for a board which has that origin are not civil servants, the distinction may be thought to be pretty fine, because, in so far as management-labour relations are concerned, management is ministerial and governmental, and the employees must be in much the same position as if they were members of the Civil Service.
Whether the staff appreciate and welcome this distinction is what I want to inquire about, because I was rather surprised to hear the Minister say, as was said in the other place, that, when it is reasonably clear that the Bill will pass into law, the Government will have a word with the staff about its effects. I would rather have heard him say, "We've got halfway through the progress of the Bill. We did not meet opposition in the Lords and see no reason to expect objection in this House, so we have had a word with the staff and they are quite happy."
But, so far as we are told, the staff, who may or may not be following the Hansard debates, have not actually had any formal consultation as to the effects of the legislation upon them. They may be perfectly happy about it, and if there has been informal consultation with their unions and the Minister can tell the House so, I hope he will not forgo the chance to tell us, because some of his hon. Friends are pretty hot on the subject of participation and believe that employees should be consulted before managerial changes of a substantial kind take place. The Government should perhaps practise what they preach.
Finally, it would help the Committee if we could clarify the functions of the board. The passage about biological work contained in the Minister's brief was more closely and tightly-defined this morning than it was in the other place,

as he dealt with biological substances for human use. There was there a bit of precision which was not in the brief in the other place.
The question which was asked in the other place, and remained unanswered, was whether biological substances of a therapeutic kind were involved. In the preliminary ramblings, there was even some mention of biological washing powders. I do not know whether this powerful new body will concern itself with those things which we are always being told on television do our smalls so much good, but it would be useful to know exactly how far the board is concerned with what one might call "commercial" as opposed to "medical" substances, and following from that, what its income is from manufacturers in this country and from international sources. I read somewhere that it did some work for the World Health Organisation.
If the board is to be capable of earning fees and charges and offsetting the cost of public funds which it represents, I welcome that very much and hope that this side of its work in current economic conditions will be extended and encouraged. I hope that there is the closest possible liaison with, for instance, the National Research Development Corporation, so that any new substances or new techniques which are developed as a result of official or private work by the employees of the board can be exploited to the best advantage through the well-known NRDC processes.
I will not pretend that any of these questions are of an immensely critical nature and that if I am not satisfied on them I shall divide the Committee or anything quite so extreme, but, subject to them, I share the welcome which the Minister has already given to the Bill and add my name as eighth in line to do so.

10.52 a.m.

Dr. Reginald Bennett: I see no objection to the idea that the Bill seeks to put into operation. If the operative staff of the MRC engaged in this division of its activities are merely going to be transferred en bloc and continue to function in their new guise as they have been functioning, I imagine that the only possible objection can be that it must increase the total overheads by having to


institute a board with its pay, premises, and other emoluments and expenditures. This proposal may entail expenditure and an increase in overheads which is justifiable, but Parliament will have to see it justified.
You, Sir Alfred, and I are formally interested in this subject, and I am sure that we and the Committee as a whole would probably like to have some idea of the nature of the work by being told by the Minister what projects are afoot at the moment. Obviously, he cannot tell us what projects will be afoot by the time the Bill becomes an Act, but I should like to know, in order to have a measure of the scale of the work, how many and what major projects are now officially being undertaken.
The splitting away of this function from the Medical Research Council does, of course, open up a division which has not, presumably, previously existed between the biochemical and biological work being done under the MRC, possibly on the same project. Presumably, the biological work involves laboratory animals and animal products, on which work is done.
One thing is not clear to me, and I daresay it may not be clear to the Committee as a whole either. Is the chemical work on a project still going to be done under the provisions that remain under the MRC, and the biological work done under this new institution? It seems to me that there is room for a certain amount of rivalry and division, and, perhaps, a loss of efficiency, if this outfit is not to carry out chemical work but only biological work Therefore, if it is allowed to carry out bio-chemical work, is not it unnecessary to break it away from its parent organisation?
Those are the thoughts that worry me somewhat in wondering about the efficacy of the budding-off of this organisation from its former parent organisation.
Another point upon which I should like to be enlightened concerns the National Institute of Biological Standards and Control, which is to become the new body that we are setting up. Does this institute itself do any research work? That has not been made clear to me. Is it, in fact, a body which only deals with assay and standardisation? Or does it carry out biological research work in

the course of needing to set new standards, as I imagine might well be necessary? There must be background research before any standard can be enunciated. Therefore, I should like some clarification on that particular point.
I do not think that these are particularly abstruse matters, and I feel that it would be for the benefit of the House of Commons and the public if we were to have a little enlightenment in the answers to the questions that I have put. Beyond that, I see no reason why anybody should need to object to the Bill, and I certainly do not.

10.57 a.m.

Mr. McCusker: I know nothing of biological standards, and I know nothing of the detail which the Under-Secretary of State has gone into. I merely want to make two observations, both of them propaganda points in their own way.
Hon. Members may now be saying to yourselves, "Why do these Irishmen always manage to make propaganda points out of any legislation that comes into force here?" Having received notice of being a member of this Committee, I did the only sensible thing and contacted the pharmacy department of Queen's University, to be told by Professor D'arcy that the director of the National Institute was a distinguished graduate of that body and had done tremendous work in this subject. Therefore, I briefly want to pay tribute to a Northern Irishman—whom Britain would not, perhaps, be keen to exclude—and his colleagues for their work in this area.
I also want to enlarge upon what was said about the commercial contribution which this board can make. I learned that in 1973 the National Institute sent 97,800 samples all over the world to 1,000 laboratories in 56 countries. That in an immense contribution to world health. It is done completely free of charge, and far from wishing to see the new organisation taking some financial advantage from that situation, I should like to see it continued and extended.

Mr. Alec Jones: I must confess that I am overwhelmed by the rather complicated and unusual questions which have been put. I appreciate the point made


by the hon. Member for Woking (Mr. Onslow) that he might have found it convenient if I could have dealt with it in a different way. Similarly, I would have found it convenient if he could have given me some notice of the questions that he was proposing to raise. Nevertheless, I shall do my best to deal with the questions raised.
I was asked about the membership and size of the board. I do not think there is any major differences between what I have said and what my noble Friend said in the other place. He was talking about a board which would have about 10 members. If I said 12 members, I should not have thought that there was a tremendous significance. Twelve is about 10. There is no significant difference in the size. No final decision has yet been made as to the exact number, but that is the approximate number we are aiming for.
There is, however, a difference, as the hon. Gentleman correctly noticed, in the number of independent members. We are considering adding a third member in order to bring in a member with some business and accounting experience in view of the board's public accountability as an autonomous organisation. I am sure that this will appeal to the hon Gentleman. It is desirable that there should be someone with that sort of experience.
The hon. Gentleman asked for some information regarding the staff size. The present staff number some 200, of whom 40 are highly-specialised scientists, some being medically qualified. There are 88 supporting technologists, including some graduates. The remainder are secretariat, clerical, maintenance and other kinds of ancilliary staff.
The hon. Gentleman also asked for some information about the budget. The present budget for the year 1974–75 is approximately £900,000. About two-thirds of that expenditure is borne by the Health Departments and the rest by the Medical Research Council.
When the board takes over, practically the whole of the costs will fall on the Health Departments, with an adjustment in respect of the Department of Education and Science's budget, which will be taken into account.
The hon. Gentleman then asked about the added expenditure and why it was needed. If functions are being transferred from an existing body to a new body, one cannot transfer exactly the right people because there are some people in the Medical Research Council who are carrying out certain clerical functions on behalf of the new body. We envisage that the board will find it necessary to engage a small number, probably not more than 10, of administrative, clerical and ancillary staff. We expect that it will mean an additional cost, at present rates, of about £45,000 a year.

Mr. Onslow: I do not think I asked what these people would do. I asked what will be done by the Medical Research Council with the £45,000, and the staff resources which are offsetting savings with regard to the Medical Research Council. Will the money be spent on other things? Or will it represent an absolute saving in expenditure?

Mr. Jones: I am not really in a position to give an answer as to what the Medical Research Council will do. I cannot envisage that it will mean a total saving. There will be a minimal saving. We are talking about £45,000. With any body I should have thought that there is bound to be some additional cost which is not part of the present MRC set-up.
The hon. Gentleman was very concerned about the staff position. He wanted some assurance that we had had some consultation with the existing staff. I can assure the hon. Gentleman that the staff are quite happy at the prospect. They have made that clear informally. We could not make any formal approaches because we had no authority, but informally they do not wish to be civil servants. The MRC staff negotiating committee concerned with the institute was told about the proposals at an early stage and was formally advised of them. The terms and negotiations have still to be negotiated when the new board is set up. I can assure the hon. Gentleman that we have kept the staff in the picture all along the line, and there is every indication that this proposal meets with their approval at present.
The hon. Member for Fareham (Dr. Bennett) asked for some indication of the present and future projects being undertaken. The major current control


projects are in viral vaccines for polio, measles, rubella, and influenza and there are also projects dealing with antibiotics and hormones. New projects are coming along dealing with blood products and diagnostic reagents. That should give some idea of the type and nature of the work at present being undertaken.
Then the hon. Gentleman asked where the chemical work was to be done. There will be a small chemistry section in the National Institute for Biological Standards and Control. Its future dependence on the National Institute for Medical Research will be negligible. The hon. Gentleman asked whether the institute could deal with non-medical biological substances. It will not do so.
The hon. Gentleman also asked about the research work done by the NIBSC. It does do research prior to the setting up of new standards. It is an essential part of its functions, which it will continue. These functions are covered by Clause 1(2), and there is clear provision for it to continue with the type of research which it considers necessary.
The hon. Gentleman also spoke about the cost of the board itself. I must make clear that there is no intention that there should be paid members of the board. Though the Bill does give powers to make a payment, the schedule says:
The Board shall pay to its members such remuneration and allowances (if any)…
It is certainly not the intention that it shall be a paid board. The Government have merely taken powers. Thus, if developments over the years show the need for payment of some attendance allowance, or something of that nature, we should not need to come back for fresh legislation.
The premises are at present located in the MRC laboratories at Mount Vernon, Hampstead. It is envisaged that they will continue there. If there were a need for considerable expansion—which is not easy to foresee at present—we would then find ourselves in some difficulties in extending the size of the buildings on that site, but at present it is intended—

Dr. Bennett: Clearly, that is possible, but what will happen with a new board? There is bound to be a board office staff,

which is entirely new. Will that be put into extensions at the MRC headquarters?

Mr. Jones: At present, we do not envisage the need for any extensions of buildings or anything of that nature. In fact, the number of additional people is about 10 clerical-type staff. For the present workload, such provision would not be necessary. But, of course, one can give no assurance about what will happen in five or ten years, because that will depend on the workload and the changing nature of the work being undertaken by this body.

11.10 a.m.

Mr. Onslow: By leave of the Committee, Sir Alfred, I thank the Minister for doing his best to answer the questions—a competent best in the circumstances.
I think the Minister sympathises the more strongly with my point about advance notice. I see absolutely nothing unparliamentary in the proposition that it would help all concerned if we had an opportunity to formulate questions in advance and, on a non-controversial matter, to give notice of what they might be. There is no political advantage in catching the Minister out on occasions like this. We simply want to get the information which interests us as quickly and as conveniently as we can. I very much hope that anyone who takes an interest in these matters from the point of view of the Leader of the House and the procedure in general might care to ask the Leader of the House to have a look at the exchanges on this point.
For the rest, I can understand the Minister's reluctance to be drawn on the work of the MRC on this occasion. I assure him that it is something we shall want to come back to, and there are sure to be plenty of other opportunities.
I am grateful to the Minister for saying what he did about the staff, and I am very glad to know that they have been taken along throughout. It is unfortunate that that was not specifically stated in the opening speeches. It would have saved time and given us reassurance if we had been told it straight out.
On the question of the size of the board, I think that if the Minister has another look he will find that it is not totally coincidental that the increase in the number of independent members


from two to three has been matched by scope for an increase in the size of the board from merely 10 to "10 or 12". I detect in this the usual anxiety of the official side to maintain a majority for itself. I do not know that the Minister and I would necessarily agree if I went further on that, but he will, I hope, bear in mind that independence may be no disadvantage where the deliberations of this body are concerned, and that to have at least three independents in a board of only 10 may be to the general public advantage. I hope that that is how it turns out.
Subject to these comments, I am grateful to the Minister and have no hesitation in supporting the Motion.

11.13 a.m.

Mr. Jones: I am sorry that I did not refer in my reply to the hon. Member for Armagh (Mr. McCusker). I meant no

THE FOLLOWING MEMBERS ATTENDED THE COMMITTEE:


Broughton, Sir Alfred (Chairman)
Jones, Mr. Alec


Bennett, Dr. Reginald
Lomas, Mr.


Callaghan, Mr. Jim
McCusker, Mr.


Cohen, Mr.
Moonman, Mr.


Coleman, Mr.
Onslow, Mr.


Davies, Mr. Bryan
Roderick, Mr.


Gardiner, Mr. George
Stradling Thomas, Mr. John


Hatton, Mr.
Taylor, Mrs. Ann


Irving, Mr. Sydney

discourtesy. Like him I share a delight that people from his part of the world and mine make a considerable contribution to the combined efforts and work of the United Kingdom.

I take the point made by the hon. Member for Woking (Mr. Onslow), and I give him the assurance that, although arrangements which the Leader of the House may be able to make will not be my responsibility, on any occasion that he and I are across the table we will have the sort of discussion that he talked about.

Question put and agreed to.

Resolved,
That the Chairman do now report to the House that the Committee recommend that the Biological Standards Bill [Lords] ought to be read a Second time.

Committee rose at thirteen minutes past Eleven o'clock.